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Microsoft’s Irish subsidiary posted $ 314 billion in profit last fiscal year, up from “only” $ 10 billion a year earlier. The company employs only directors and is an extreme example of tax avoidance.
Microsoft Round Island One is a subsidiary of Microsoft and there is no doubt that the huge turnover of the company is not the result of the hard work of its non-existent workforce, independent of the parent company. The official purpose of the company is to collect license fees for using the software.
“Unethical, Immoral and Unjustifiable”
The fact that an Irish company paid a zero tax on income close to Ireland’s GDP ($ 433 billion) has outraged politicians who are fighting Ireland’s status as a tax haven. Microsoft also took advantage of the similar status of Bermuda, granting its company tax resident status there. As a result, they could not pay any corporate income tax as there is no such obligation there.
Tax avoidance is called “the letter, but not the spirit of the law.” Contrary to tax avoidance, circumvention of taxes uses various legal loops and favorable conditions in various kinds of “tax havens” to optimize the amount of taxes payable by the company. This is more and more often discussed in the context of unethical activities that burden the budgets of the countries in which the companies operate. Ultimately, the infrastructure or public education that provides the company with employees is used, but the state budget does not get a return on this “investment” because the company moves with taxes to an island that logically has nothing to do with its activities.
This tone was expressed by, for example, Labor politicians who called the tax optimization introduced by Microsoft simply unethical and immoral. The talks on this subject are currently taking place largely in the context of the proposal by the President of the United States, Joe Biden, who proposed adopting a global minimum corporate tax rate of 15%. Ireland may ultimately be against such a solution due to its status as a tax haven.
In 2020, Microsoft Round Island One paid $ 55 billion in dividends.
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