29 billion dollars
US tax authority demands gigantic additional payment from Microsoft
October 12, 2023, 1:08 a.m
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Microsoft is faced with a massive tax demand. The company hopes to reduce the $29 billion claim. The company’s shareholders are hardly impressed by the gigantic sum.
The US tax authority is demanding a huge back tax payment of around $29 billion from Microsoft. The software giant wants to defend itself against this. The $28.9 billion (around €27.2 billion) plus penalties and interest were claimed for the years 2004 to 2013, Microsoft said. The tax authority IRS (Internal Revenue Service) sees problems with prices when billing between parts of the company.
Microsoft contradicts the request. The group will first lodge an objection with the IRS and will also take legal action if necessary. A solution is not expected in the next twelve months.
Microsoft says it has since changed its practices so that the questions raised by the IRS are relevant to the past, but not to current practices. The group also expects that taxes owed following the audit could be reduced by up to $10 billion based on tax laws passed by former President Donald Trump.
To put these sums into perspective: Microsoft recorded a net profit of more than $70 billion in each of the past two financial years. In the years 2004 to 2013, the software company’s profits were between 7.5 and a good 23 billion dollars. Investors were calm about the huge additional demand: the shares initially barely reacted to the news. Microsoft is currently valued at $2.47 trillion (that’s 2,470 billion) on the stock market.