Microsoft, HP among US firms that manoeuvred to avoid billions in taxes: Report
21 Sep 2012
A US senate committee memo says Microsoft Corp had resorted to aggressive international tax manoeuvres to avoid billions of dollars in taxes over the past three years.
The committee memo, released for a hearing today in Washington, said Microsoft saved at least $6.5 billion in taxes through transactions with subsidiaries in Puerto Rico, Ireland, Singapore and Bermuda.
According to the committee's memo, Hewlett- Packard Co had used a number of short-term internal loans that allowed it to tap its offshore cash for domestic operations without paying taxes.
Senator Carl Levin, a Michigan Democrat and chairman of the Permanent Subcommittee on Investigations, stopped short of accusing the companies of any wrongdoing, but he said he was ''highly dubious'' regarding HP's compliance with the tax law.
Levin told Bill Sample, Microsoft's corporate vice president for worldwide tax, at the hearing that such financial manoeuvres ''may be in your temporary interest as a corporation," as they increased profits and reduced taxes, but there was a heavy cost to the US.
Levin and the panel's top Republican, Tom Coburn of Oklahoma sent the memo to committee members. Coburn said the moves amounted to "properly legal tax avoidance" by companies working the tax code that needed an overhaul to their advantage.
