Microsoft is warning US tax authorities that they could hurt the company's profits because they are looking at Microsoft's use of transfer pricing to reduce its tax bill . But then, US authorities have good reason to do it.
As TechFlash reports, Microsoft is shaving millions of its tax bill by channeling its earnings from sales through the low-tax havens of Ireland, Puerto Rico and Singapore.
According to Reuters, Microsoft's pre-tax profits booked overseas nearly tripled over the past six years, to $19.2 billion in the fiscal year that just ended while its US earnings have dropped. Reuters points out that what Microsoft is doing isn't illegal because other US corporations are doing the same but it makes the point that Microsoft's numbers are at the more extreme end.
Still, it's galling to read this at a time when the US is heading towards default and a downgrading because it's running out of money.
While Republicans talk about fiscal responsibility and necessary cuts needed in entitlement programs that benefit needy Americans, corporations like GE, oil companies and now Microsoft are raking in billions in tax-free revenue.
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