10.31.12
Microsoft Financial and Accounting Tricks Investigated by US Senate
Summary: Microsoft may be forced to stop cheating shareholders, taxpayers, and the public in general
US politicians recently capitaised on public will to end corporate welfare (tax cuts for the rich) and Microsoft came under fire, as it very much deserves for dodging tax. The matter of fact is, Microsoft had debt and recently it also found itself unable to hide losses.
According to this, the Senate starts taking action:
Microsoft and HP in the hot seat as Senate investigates offshore profit shifting
A hearing on offshore profit shifting last week exposed aggressive tax planning strategies employed by Microsoft and Hewlett-Packard (HP) and illustrated the critical need for more disclosure.
On September 20, the Senate Permanent Subcommittee on Investigations held a hearing on “Offshore Profit Shifting and the U.S. Tax Code.” Witnesses from academia, the Internal Revenue Service, U.S. multinational corporations, international tax and accounting firms and the nonprofit Financial Accounting Standards Board (FASB) answered questions from the Senators about how tax and accounting rules allow U.S. multinationals to shift profits offshore using dubious transactions and complicated corporate structures.
The committee looked at two case studies investigated by the committee staff. In the Microsoft case, the committee investigation found that 55 percent of the company’s profits were “booked” (claimed for accounting purposes) in three offshore tax haven subsidiaries whose employees account for only two percent of its global workforce. Microsoft did that by selling intellectual property rights in products developed in the U.S. (and subsidized by the research tax credit) to offshore tax haven subsidiaries, then creating transactions to shift related profits there.
Where are lawmakers when you need them? Well, some are former Microsoft executives (we named them in the past), so the system was evidently corrupted. Can some form of justice be restored? █