Microsoft is gearing up for a heavyweight bout with the US tax authority over a whopping $28.9bn back taxes claim for the period 2004 to 2013.
The tech titan is under the microscope for how it divvies up profits among countries and jurisdictions. But Microsoft isn’t taking this lying down, stating, “the issues raised by the IRS are relevant to the past but not to our current practices”.
The tech world has been under fire for playing a game of hide and seek with profits, reporting lower figures in high-tax countries and higher ones in tax-friendly zones.
Microsoft, in its defense, insists it’s been playing by the rules, stating it has “always followed the IRS’s rules and paid the taxes we owe in the US and around the world”.
The company is banking on a silver lining, believing that any tax bill post-audit could shrink by up to $10bn, thanks to tax laws passed under former President Donald Trump.
But Microsoft isn’t alone in this tax tango. Fellow tech giants Amazon and Facebook have also been asked to cough up more taxes.
This year, Microsoft has been in the hot seat with other US authorities. In June, it forked out $20m to the Federal Trade Commission (FTC) for illegally collecting data on kiddie Xbox users.
But it’s not all doom and gloom. The company is on the brink of a win with its proposed $68.7bn acquisition of Activision Blizzard, the brains behind Call of Duty, expected to get the green light soon.