L’Internal Revenue Service (IRS)the United States tax agency, asked Microsoft to pay the enormous sum of $29 billion in unpaid taxescovering the period between 2004 and 2013. Microsoft responded by announcing that it will present a appeal against this decision.
Microsoft, US IRS demands $29 billion in unpaid taxes
The same company explained that the dispute between Microsoft and the US tax authorities concerns the revenue transfer across international jurisdictions. This practice, known as “cost sharing“, according to the company it is commonly adopted by numerous large multinationals. The company has emphasized its belief that its actions are comply with IRS tax rules and regulations. Microsoft thinks legal precedent is on its side.
On its blog, Microsoft explains that the IRS request does not represent an official determination. And he says that, considering the Tax Cuts and Jobs Act (passed in 2018 during the Trump administration), Microsoft should eventually up to 10 billion dollars less than the proposed figure.
Microsoft has announced an appeal, which will take several years. We have asked Microsoft for a statement regarding the appeal, we will keep you updated.
Tax and tech
As Il Sole 24 Ore highlights, the tax issues linked to large US tech companies represent a problem of global scope. The governments of several countries accuse giants such as Apple, Amazon and Microsoft to redirect their revenues to lower tax jurisdictions or even zero, in order to avoid taxes in their main markets and maximize profits.
These types of processes, however, take a long time. In 2016, the European Union ordered Apple to pay an extraordinary sum of 13 billion euros in back taxes. However, Brussels initially lost an appeal against this decision and is now awaiting the outcome of a further appeal.
It remains to be seen what result the appeal requested by Microsoft from the US tax authorities will give, we will keep you updated.
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