Microsoft’s offshore profits have increased 17% to $108bn, due to the company’s continual profits in low-tax foreign jurisdictions.
Citing a securities filing, Bloomberg reported that Microsoft is the second US firm after General Electric to cross the $100bn mark.
Apple has more cash in foreign countries when compared to Microsoft. The iPhone maker has assumed for accounting purposes to pay tax on some of its stockpile, which will leave $70bn offshore profits that may affect its earnings directly if returned.
The US tax code is allowing Microsoft to keep its money in foreign countries.
The news agency reported that the company will be required to pay the difference between its foreign taxes and the 35% US corporate tax rate if it brings back the cash.
Microsoft will have to pay the $34.5bn in taxes to get its $108.3bn back. It is equal to a 31.9% rate, which indicates that the company has paid just about 3.1% in taxes on its foreign income, due to operations in low-tax Singapore, Puerto Rico and Ireland.
The US government’s Internal Revenue Service agency and Microsoft are engaged in a legal battle on the company’s transfer pricing, or intracompany transactions.
Content from our partners
Microsoft’s returns are being audited by the federal government dating back to 2004. The company has challenged the government’s appointment of outside lawyers.
