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Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

VileReynard
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Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

http://www.dailymail.co.uk/news/article-2245412/Microsoft-avoids-paying-159MILLION-corporation-tax-E...
Quote
Microsoft pays no tax on £1.7billion of online sales in the UK thanks to a legal loophole, it has been reported.
The technology monolith is funnelling cash generated by online sales of Windows 8 software to Luxembourg to sidestep tax obligations, according to The Sunday Times.

In 2011 Microsoft's UK operation paid £19million in corporation tax, 2.8 per cent of revenue totalling £663 million. UK corporation tax currently stands at 24 per cent.

15 REPLIES
Community Veteran
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Registered: 02-02-2008

Re: Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

Crazy
Corporation tax is NOT a turnover tax; look it up. Sounds like the Wail didn't bother......  Sad
VileReynard
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Re: Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

I know what corporation tax is - it's what Starbucks decide they'd like to pay.  Grin
Online UK sales of £1.7billion with negligible costs should be taxed in the region of £400 million.
Not £19 million?
Microsoft is twice as profitable as Starbucks! (£10 million offered).  Cheesy

Community Veteran
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Re: Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

Quote from: Un
Online UK sales of £1.7billion with negligible costs

Depends how negligible those costs really are. It can't be cheap to hire programmers all year round can it.
I need a new signature... i'm bored of the old one!
Community Veteran
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Registered: 02-02-2008

Re: Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

"Software is free" (allegedly  Huh ).
Community Veteran
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Re: Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

Windows 7 on this computer certainly was  Grin
And no, before anyone suggests I'm promoting software piracy or putting forward a stereo typical view, this machine was simply ultra cheap. Despite coming from a supermarket (with a receipt) it cost less than the cost of a new windows disk and came with all the accesories like a monitor. No idea how they managed that but I didn't hang around when I saw it on the shelf, I suspect they took a loss to clear it.
I need a new signature... i'm bored of the old one!
Community Veteran
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Registered: 23-09-2010

Re: Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

Maybe there's a hitherto unknown "service" running in windows.
The tax offices around the world just haven't noticed it yet on their windows powered PC's.
kmilburn
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Re: Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

While us programmers aren't cheap, the departments responsible for Windows and Office have an net profit margin of about 80%,  it take some clever accounting to make that go away.  Then again,  the division than included the XBox used to lose $3 billion a year.
That's one of the biggest problem with Corporation tax,  it's on net profits not gross revenue,  while us individuals pay tax on gross income!
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Re: Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

Quote from: kmilburn
While us individuals pay tax on gross income!

Unless your self-employed based from home, then there are "allowances" deductible before tax.
Would be interesting to see what others manage to claim as an allowance
VileReynard
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Re: Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

"Consultants"
Designate their home as their office, so that you can claim a mileage allowance for travel to work.
Reclaim the VAT element of petrol...
Discount any hardware you buy as "capital expenditure"
Pay yourself a small salary - pay yourself mostly in dividends (tax rate is much less).
Get your company to pay for a pension.
That's without really trying.  Grin

Community Veteran
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Re: Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

Quote from: Un
claim a mileage allowance for travel to work.
Reclaim the VAT element of petrol...

You can't do both.....
Quote
Discount any hardware you buy as "capital expenditure"

Only if wholly and necessarily required for the business. Note WHOLLY.
Quote
Pay yourself a small salary - pay yourself mostly in dividends (tax rate is much less).

Less so these days and HMRC have been wise to that for some time.
Quote
Get your company to pay for a pension.

That makes no sense.  Crazy
If a consultant saves into a pension it's effectively from income. Same as anyone else.
I can assure you that, as a genuine self-employed consultant, I know there are less opportunities to benefit from anything than as an employee with a "reasonable" employer.
That especially applies to pensions, though very few employers are generous there these days.
Community Veteran
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Re: Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

So the real question must be why does the EU allow Luxembourg to operate a tax system that is to the detriment of other EU countries ?
Community Veteran
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Registered: 12-08-2007

Re: Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

Each country is free to set its own CT level as is the case of our decision to reduce ours to 21% to encourage inward investment.
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Re: Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

Odd when you consider the EU want everyone of it's members to use the Euro despite the effects it may have on an individual country yet at the same time leave each country free to set it's own CT level.
Community Veteran
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Re: Microsoft avoids paying 159MILLION corporation tax EVERY YEAR

Rates vary so much from country to country.
Corporate Tax Rates
Interestingly, if you look at Luxembourg  its rate isn't low so why do companies like Amazon and Starbucks channel their earnings there?