Microsoft owes $29 billion in back taxes, says US govt

WASHINGTON: Microsoft owes the US Treasury $28.9 billion (£23bn) in back taxes, plus penalties and interest according to the Internal Revenue Service (IRS).

The figure, which Microsoft disputes, stems from a long-running IRS investigation into how Microsoft allocated its profits among countries and jurisdictions in the years 2004 to 2013, according to a securities filing. Critics of the practice, known as transfer pricing, argue that companies frequently use it to minimise their tax burden by reporting lower profits in high-tax countries and higher profits in lower-tax jurisdictions. Microsoft, which is based in Redmond, Washington, said it followed IRS rules and will appeal the decision within the agency, a process expected to take several years.