Washington, D.C. – After years of resisting calls for more transparency from investors, many large U.S. multinational corporations are finally publishing detailed breakdowns of tax and other financial data pursuant to the European Union’s Country-by-Country Reporting (CbCR) Directive. Microsoft was among the first major American corporations to publish their CbCR for FY2024-2025.
“Microsoft’s new tax disclosures raise serious questions about the misalignment of economic substance and where profits are located, and how much revenue the U.S. and other market countries are losing as a result,” said Zorka Milin, co-director of the FACT Coalition. “These are high-stakes questions, particularly for a company that is currently contesting the biggest tax case in U.S. history, and is also positioning itself to be one of the top beneficiaries of the artificial intelligence boom. If our tax rules already aren’t fit for taxing digital giants, then these rules urgently need to be updated for an AI-driven economy.”
At-a-Glance: Microsoft’s Profits in European Tax Havens Dwarf Employee Footprint
Microsoft insists that it complies with all relevant tax laws. But that’s precisely the problem: it’s a failure of U.S. tax policy that the largest and most profitable American companies like Microsoft can continue to book profits in tax havens. Our tax code continues to heavily incentivize American businesses to shift profits overseas.
“Countries like Ireland and Luxembourg are not to blame for eroding the U.S. tax base. The fault lies in America’s own broken tax code,” said Milin. “What’s worse, Congress and the Trump administration have repeatedly gone to bat to allow the largest U.S. companies to continue shifting profits to tax havens by attacking the internationally-agreed global minimum tax. These new disclosures provide fresh evidence that it’s time to reject the broken status quo and stop big corporations like Microsoft from stashing their profits in tax havens.”
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Notes to the Editor
- Microsoft’s first public country-by-country tax report is available here, with additional context provided by the company here.
- In 2022 and 2023, Microsoft’s shareholders proposed a resolution to require Microsoft to issue a tax transparency report, which garnered more than 20 percent of the vote in both years.
- Microsoft is contesting a record-setting $28.9 billion transfer pricing dispute with the IRS for the 2004–2013 tax years. For more details on Microsoft’s history with transfer pricing and tax transparency, see FACT co-director Zorka Milin’s 2023 analysis.