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.
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No comment, I just would like the follow-up comments on this stoiry
Is it reasonable to make a connection between the company and its sheanigans and BillG? It is a public company and not, as far as I’m aware, run as a lifestyle organisation – like some I could mention.
Dennis – yes I think it is. Sure this is a public company – but one which has always been dominated by its CEO, who has never sought to avoid the association.
It is impossible to believe that the Irish activity could not happen without his agreement – and if it does, then there’s something seriosuly wrong with its governance.
So either way – this is Bill G’s responsibility in my opinion
[…] Richard Murphy talks about Microsoft’s latest attempts to hide its tax avoidance schemes from public scrutiny, referring to an article in FinFacts. Richard believes – and with some justification – that the scale of tax avoidance could not be sanctioned without Bill Gates knowledge. More like Steve Ballmer in my view but let’s not split hairs. […]
It’s possible that Bill Gates has teams of accountants making all these decisions for Microsoft and that if he were to personally intervene and stop them from doing it, he would run the risk of making himself look like a right numpty within the corporate milieu.
I believe that it’s down to individual governments to crack down on aggressive tax avoidance by legislating to prevent corporate profits escaping the tax net through clever transfer pricing arrangements. A general anti-avoidance principle could do this.
I agree. A genreal anti avoidance principle will help. They will feature in our forthcoming code of conduct for taxation
[…] the consequence of blatantly stealing other country’s tax revenues – as was the case with Microsoft, for example. The simple fact is, there’s only room for one thief in town. This is also why […]