{"id":18554,"date":"2012-12-09T21:37:09","date_gmt":"2012-12-09T21:37:09","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=18554"},"modified":"2012-12-10T04:13:17","modified_gmt":"2012-12-10T04:13:17","slug":"microsofts-potential-tax-avoidance-a-more-realistic-estimate","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/12\/09\/microsofts-potential-tax-avoidance-a-more-realistic-estimate\/","title":{"rendered":"Microsoft&#8217;s potential tax avoidance &#8211; a more realistic estimate"},"content":{"rendered":"<p>As<a title=\"Microsoft \u2014 looking like it\u2019s in the upper echelons of the tax avoiders\" href=\"http:\/\/www.taxresearch.org.uk\/Blog\/2012\/12\/09\/microsoft-looking-like-its-in-the-upper-echelons-of-the-tax-avoiders\/\"> I have noted earlier today,<\/a> the Mail put out an estimate of \u00a3159 million of tax avoided by Microsoft in the UK today. In my blog I noted this was not my\u00a0calculation\u00a0(the main story\u00a0and number were published before I spoke to any journalist or knew the Sunday Times had also looked at this issue) and that I thought it looked high.<\/p>\n<p>I now confirm I do think it looks high.<\/p>\n<p>I have looked at\u00a0Microsoft's\u00a010-K accounts for 2012 (<a href=\"http:\/\/investing.businessweek.com\/research\/stocks\/financials\/secfilings.asp?ticker=MSFT\" target=\"_blank\">available on link from here<\/a>). The turnover to Jun 2012 was $73.7 bn and the profit pre tax was $22.26. That's a margin of 30.2%.<\/p>\n<p>Tax was declared of $5.289bn, of which \u00a32.388bn was in the US, $1.947bn was international but not specified and $0.954bn was deferred.<\/p>\n<p>Now it's been reported that\u00a0Microsoft\u00a0has a UK estimated trade turnover of \u00a31.7 billion but\u00a0according\u00a0to reports only \u00a3663 of this goes through Microsoft UK, the rest being billed from\u00a0elsewhere. The suggestion is that Luxembourg is used.<\/p>\n<p>If the UK sales are really \u00a31.7 billion then the UK profit margin should be, assuming homogenous margins (and there is no reason not to, in my opinion) about \u00a3513 million.<\/p>\n<p>Tax due on that would be about \u00a3122 million.<\/p>\n<p>It has been reported that \u00a319 million was paid.<\/p>\n<p>That would seem to suggest tax saved of \u00a3103 million, and not \u00a3159 million, which looks like a\u00a0journalists\u00a0error.<\/p>\n<p>If true, that scale of\u00a0avoidance\u00a0remains\u00a0considerable and helps explain why\u00a0Microsoft\u00a0has an overall tax rate of less than 20% compared to the 35% (0r more) US tax rate. The 10-K implies the overseas rate was under 14% and admits it was low due to makinng sales throgh Ireland, Puerto Rico and Singapore, all clearly chosen for their low tax rates. But I think the record needs to be put straighter than what appears to be an over-estimate at \u00a3159 million.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As I have noted earlier today, the Mail put out an estimate of \u00a3159 million of tax avoided by Microsoft in the UK today. In<br \/><a class=\"moretag\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/12\/09\/microsofts-potential-tax-avoidance-a-more-realistic-estimate\/\"><em> Read the full article&#8230;<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-18554","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/18554","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=18554"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/18554\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=18554"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=18554"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=18554"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}