“In Microsoft’s case, the company charges three foreign subsidiaries large licensing fees to sell its products. In 2011, two of those subsidiaries, in the low-tax jurisdictions of Ireland and Singapore, paid about US$4 billion for those licenses, then sold products worth $12 billion, even though U.S. tax law requires the subsidiaries to pay fair prices for the transfer of assets, Levin said.”
Well, it looks like the oh so loyal USA is being betrayed by M$. All those $billions in revenue reported to SEC are not pumping up the US economy after all. In fact, M$ is a drain on the US economy by charging monopoly prices at home and effectively giving the rest of the world a discount.
2012 looks like a win for Obama, the Democrats and US taxpayers if they rein in M$’s abuses. Tens of $billions more coming into the US economy is small but important. Eliminating all those licensing fees by switching to FLOSS would be worth much more.
Are you paying your fair share?
- M$’s tax rate – “Our effective tax rates for fiscal years 2012 and 2011 were approximately 24% and 18%, respectively. Our effective tax rates were lower than the U.S. federal statutory rate primarily due to earnings taxed at lower rates in foreign jurisdictions resulting from producing and distributing our products and services through our foreign regional operations centers in Ireland, Singapore, and Puerto Rico, which have lower income tax rates.”
- Google’s tax rate – “
Year Ended December 31, 2009 2010 2011
Provision for income taxes
$ 1,861 $ 2,291 $ 2,589
Effective tax rate
22.2 % 21.2 % 21.0 %
A note from M$’s 10-K filing is relevant:
“We may have additional tax liabilities. We are subject to income taxes in the U.S. and many foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. We regularly are under audit by tax authorities. Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different from our historical income tax provisions and accruals. The results of an audit or litigation could have a material effect on our financial statements in the period or periods for which that determination is made.
We earn a significant amount of our operating income from outside the U.S., and any repatriation of funds currently held in foreign jurisdictions to the U.S. may result in higher effective tax rates for the company. In addition, there have been proposals to change U.S. tax laws that would significantly impact how U.S. multinational corporations are taxed on foreign earnings. Although we cannot predict whether or in what form any proposed legislation may pass, if enacted it could have a material adverse impact on our tax expense and cash flow.”