It’s well known that Microsoft is a wealthy company with its current market valuation at $374.4 billion. An estimated $108.3 billion of the profits are sitting outside the US and this is something the US Government is keen to change. However, current law in the U.S. isn’t making it attractive for Microsoft and other US companies to capitulate with Internal Revenue currently in a legal battle with the company over the matter according to a Bloomberg report.
There is a possible compromise in the works with the US government supporting the proposal of an amnesty tax rate of 14 percent. U.S. law states that companies only have to pay tax when they repatriate the money from abroad so it’s understandable that Microsoft is happy to leave the money where it is.
Microsoft gets a better tax rate on its earnings abroad with low-tax countries such as Ireland, Singapore and Puerto Rico offering as little as 3.1 percent tax rates. If Microsoft brought its money back to the US, it would have to pay the difference between the foreign tax rate and the US tax rate which currently sits at 35 percent and that’s a whole lot of money.
What are your feelings on this? Should Microsoft bring the money home? Are they being too greedy?
