Microsoft does tax avoidance in secret

Posted on

In November last year the Wall Street Journal reported that Microsoft was saving as much as $500 million a year in tax by the use of an obscure Irish holding company called Round Island One Limited to collect almost all of its world wide revenues from outside the USA. I admit I was pleased to have played a part in bringing that story to light.

Microsoft suffered a lot of flack in both Europe and the US for having engaged in such an obvious tax planning activity. I think that was appropriate.

Now Microsoft has decided to do soemthing about its activities in Ireland. Of course, what one would have hoped would be that they had decided, in the true spirit of what I think to be corporate responsibility, to have paid tax in all the countries in which they make their sales in at least broad proportion to the revenues earned there.

That would, however, be too much to hope. Instead Microsoft has, according to reports on Irish website FinFacts, decided to re-register Round Island One as an unlimited company. Which means it will no longer have to file its accounts in Ireland for public inspection but will retain all the benefits of its structure.

I have three reactions to this. Firstly I call it corporate irresponsibility. Second I think it proves that Ireland is being used as a tax haven, in which act it connives. Third, the next time someone points out Bill Gate’s philanthropy I’ll politely point out that if his corporation paid the tax that it avoided there might be less need for his personal aggrandisement through the activities of his foundation.