Microsoft’s Australian subsidiary will start disclosing the amount of tax it pays in Australia, opting in to a government-transparency program aimed at shedding light on the shadowy world of global tax avoidance, the Australian Financial Review reported.
Australia’s government is one of the most aggressive in a global crackdown on multinational corporations that avoid taxes by stashing income in tax havens.
A statute recently enacted there sets up a voluntary reporting scheme in which companies publicly disclose their profit and income tax paid to Australia, “to highlight those that are paying their fair share and to encourage all businesses not to engage in aggressive tax avoidance.”
Microsoft Australia will be the first local arm of a multinational technology firm to join the program, the Australian Financial Review reported Friday. Microsoft declined to comment.
Microsoft, like many multinational companies, has spent decades building a corporate structure designed to minimize taxes by funneling revenue to tax havens, including Singapore, Ireland and Bermuda. A portion of that structure is being scrutinized by the Internal Revenue Service, part of a contentious audit that has wound up in federal court in Seattle.
The Redmond-based company as of June 30 had accumulated more than $124 billion in income, untaxed in the U.S., that it deems permanently reinvested in other countries.
Microsoft says the sum would be subject to $39.3 billion in U.S. taxes if it were repatriated. That disclosure indicates that some income generated by Microsoft’s overseas operations is subject to a tax of as low as 4 percent, lower than the going rate in any of Microsoft’s major markets.
Australia’s top corporate tax rate is 30 percent. The U.S. has the highest corporate rate in the developed world, at 35 percent, though many multinational companies actually pay a lower effective rate.
The scope of the figures Microsoft will report under the new Australian…