Microsoft owes $29 billion in back taxes says US government

US News

Microsoft owes the US Treasury $28.9 billion (£23bn) in back taxes, plus penalties and interest according to the Internal Revenue Service (IRS).

The figure, which Microsoft disputes, stems from a long-running IRS investigation into how Microsoft allocated its profits among countries and jurisdictions in the years 2004 to 2013, according to a securities filing

Critics of the practice, known as transfer pricing, argue that companies frequently use it to minimise their tax burden by reporting lower profits in high-tax countries and higher profits in lower-tax jurisdictions.

Microsoft, which is based in Redmond, Washington, said it followed IRS rules and will appeal the decision within the agency, a process expected to take several years.

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The company said it has since changed its practices so that “issues raised by the IRS are relevant to the past but not to our current practices,” according to a Microsoft blog.

Microsoft said it believes that any taxes owed after the audit would be reduced by up to $10 billion (£8bn) based on tax laws passed by Donald Trump.

Microsoft shares dropped slightly in aftermarket trading, falling $1.42 (£1.15) to $331 (£269).

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