Did Microsoft Shift Its Profits to Low-Tax Countries? (nytimes.com)
- Reference: 0184308774
- News link: https://yro.slashdot.org/story/26/07/04/193215/did-microsoft-shift-its-profits-to-low-tax-countries
- Source link: https://www.nytimes.com/2026/07/03/technology/microsoft-europe-disclosure-tax-havens.html?unlocked_article_code=1.vFA.AZUY.Qj8Au9rWTOvu&smid=url-share
But in 2026 the EU now requires a country-by-country compliance report, and the New York Times notes that Microsoft "was most likely [3]the first major U.S. technology company to make a so-called country by country report of its finances to comply..."
> Like other big companies, Microsoft uses transactions between subsidiaries to shift profits around to reduce its tax bill. The report revealed a consistent pattern: high returns in low-tax jurisdictions and slim margins in higher-tax ones. The report showed the sometimes absurd results. Microsoft said it had generated almost 40 percent of its pretax income in tax-friendly Ireland, where it employed about 3 percent of its global work force. In higher-tax Germany, the largest economy in Europe, Microsoft earned barely half of 1 percent of its global profits, it said.
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> Excluding Ireland, the company said, it generated less than 2 percent of its worldwide pretax earnings in Europe... [In Luxembourg Microsoft said it had $283 million in pretax income with only 34 employees.]
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> [America's] Internal Revenue Service is challenging profit-shifting transactions used by Microsoft, and is seeking back taxes of [4]nearly $29 billion 4. The company has said it disagrees with the I.R.S. and said in a securities filing that it "will vigorously contest" the proposed tax bills.
This week a Microsoft blog post offered their own " [5]context ," arguing that tax is "one important measure of contribution, but it is not the only one.
"Our investments, partnerships, infrastructure, and long-term presence in countries around the world also reflect a commitment to helping strengthen the economies and communities where we operate, today and for the future."
[1] https://www.siliconrepublic.com/business/ireland-still-integral-to-microsoft-says-ballmer
[2] https://www.slashdot.org/~theodp
[3] https://www.nytimes.com/2026/07/03/technology/microsoft-europe-disclosure-tax-havens.html?unlocked_article_code=1.vFA.AZUY.Qj8Au9rWTOvu&smid=url-share
[4] https://www.sec.gov/Archives/edgar/data/789019/000119312526191507/msft-20260331.htm
[5] https://blogs.microsoft.com/on-the-issues/2026/06/30/context-on-our-country-by-country-tax-footprint/
Does a bear do something in the woods? (Score:4, Interesting)
Gosh, I hate to feel like I'm put in the position of trying to defend a corporate cancer, even if the fine people of Microsoft have tried a little to mend a few of their evil ways, but I cannot pass by the low hanging fruit. Of COURSE they did it. You know they did it, and some more besides. (With apologies to Flip...) But they had to do it or they would have been crushed or acquired or worse by some bigger and meaner, dare I say more evil, corporate cancer that did a better job of retaining its earnings by using tax dodges.
I think there may be a root of the problem: When any dimension becomes too dominant, then the system tends to collapse along that dimension. Profit uber alles destroys everything in its path.
Solutions? A progressive tax on monopoly profits? Naw, that trick will never work. (With apologies to Rocky...)
Re: (Score:2)
Too bad there's not a moderation category of "+1 both Insightful and Funny". But yeah, someone please mod parent up.
Dimensional collapse is a good thing? (Score:2)
Now you've gone an put a fork in it. I feel like I have an excuse to try to clarify the dimensional thing a bit.
Mathematicians among us may fear the curse of dimensionality, but that's the way the world works. LOTS of dimensions. But we humans are not good at dealing with more than a few a a time, so we always try to prioritize one or a few of them. It's not that the other dimensions don't matter, but we ignore them and that often causes problems. Probably extinction if the Fermi Paradox isn't some kind of
Re: (Score:2)
While the Double Irish is no more, finding other avenues to avoid taxes (and increase shareholder value) is something all the multinationals consider, and have their best lawyers attempt to find new loopholes in the tax codes of the countries they operate in.
Its already progressive ... (Score:2)
> Solutions? A progressive tax on monopoly profits? Naw, that trick will never work.
We already have a progressive tax system in the USA. The top 1% pay about 38% of all federal income taxes, while earning around 22% of all income. The bottom 50% pay about 3% of all federal income tax, while earning about 12% of all income. States with income taxes show similar trends.
Re: (Score:2)
The ONLY problem is that not everyone else has done so yet. Government shouldn't be allowed to tax income and profit.
Shifting profits (Score:3)
Companies were doing this long before Microsoft was incorporated. Then they lobby for lower corporate taxes so they can bring the profits home, presumably to fund even bigger executive bonuses. Most companies that engage in international trade do this. They try to take their costs in the high tax countries and their profits in the low tax ones. They manipulate the costs in their internal books when the transfer items from country to country.
Re: (Score:2)
But these days they've perfected the art of bribing the cheapest politicians to rig the rules in their favor for more profits. In conclusion, we can now solve the energy crisis by attaching magnets to Adam Smith's corpse and generating electricity as he spins in his grave.
Re: (Score:2)
not only do they lobby - more like bribe; they often write the legislation
Everyone does. (Score:3)
Most large American (and other countries with reasonable tax rates) corporations at least consider moving to Ireland or similar countries to lesson tax burden. This is hard to stop.
You could declaring that profit margins in the low tax nation is the same margin for all income earned in the US. That is if you declare a profit margin of 24% in Ireland than 24% of all money leaving the US is considered profit and taxable at American rates. This is something that would involve a lot of arguments and I could see accountants getting paid even more to negate this trick.
Another way to do it is to declare that any American owning such corporations must pay 2% (or a similar number) of the value they own as a yearly tax. Example: if Bill Gates owns 100 billion in Microsoft stock, then he must pay 2 billion in taxes yearly for owning it. This kind of thing is harder to argue with, particularly for public corporations as their value is determined by the market.
Frankly, the 2nd method is far superior in my mind. A lot of the abusive practices the wealthy use to evade taxes are caused by us taxing 'profits' rather than net worth. Profits are easy to hide, net worth less so.
Betteridge's Law of Headlines Broken (Score:3)
While the law of Headlines would say this is a "no," this is one case of a resounding "Yes of course they did!". America has been shifting taxes from corporations onto individuals, and regressively taxing individuals since the implementation of the Income Tax. Mind you the income tax was never intended by those who pushed for the Constitutional amendment in the Progressive Era to be a tax on anyone but the super wealthy. The way it worked out is that the middle class pay the bill of taxes and corporations/ultra wealthy are adept at dodging it. They have the power to lobby for arcane changes in the tax code to benefit them. The money has to come from somewhere, and it's been on the backs of the average American for a long time. Neither party wants to do anything about it, Dems want more taxes for social services, Republicans want regressive tarriffs and corporate welfare.
What Do The Numbers Tell You? (Score:2)
Country ===== Profit Before taxes.
Ireland ====== 47,083,027,808
Gemany ===== 661,226,924
Malta ====== -765,780,100
Ireland is purely bullshit.
Malta is extremely interesting and almost certainly bullshit. They're probably getting some sort of Maltese welfare.
The numbers for Panama are absurdly low. Is Panama no longer a tax haven?
Unfair on SMEs (Score:2)
Running a business with $15M turnover, we are not big enough to take advantage of big business shenanigans.
It peeves me off no end, that I pay 30% tax on profits while big multinationals spirit their profits off tax shelters.
I don’t mind paying the tax, as you need tax to provide for a modern society. I’m peeved multinationals are allowed to engage in tax fraud.
Time to send in oracle auditors (Score:2)
EOM
Countries are part of the problem as well (Score:3)
Countries set themselves up as tax havens to encourage countries to locate there; to the point is one of their largest industries.
Tax the billionaires fairly too? (Score:1)
Billionaires flock to low tax states to avoid taxes too.
Re: (Score:3)
True. Location, location, location!" is the new "Developers, developers, developers!": [1]Jeff Bezos's Move From WA To FL Has Saved Him Close To $1B in Taxes This Year [slashdot.org]
[1] https://yro.slashdot.org/story/24/07/07/186222/jeff-bezoss-move-from-wa-to-fl-has-saved-him-close-to-1b-in-taxes-this-year
They move to low tax cities too (Score:2)
> Billionaires flock to low tax states to avoid taxes too.
Companies move to low tax cities too. Look at the various companies moving 12 miles, leaving Seattle and relocating in Bellevue