Stand your ground, Microsoft
Microsoft must not follow Starbucks’ example and cave in and pay more corporation tax than it is legally obligated to, due to misguided public pressure and an ill-informed media frenzy.
The US technology organisation has become the latest multinational company to become embroiled in the UK corporation tax row, after The Daily Telegraph revealed at the weekend that it paid no such tax last year, despite generating revenues of £1.7 billion.
The news comes days after Starbucks, the coffee chain, voluntarily agreed to pay £20 million to the UK taxman, even though it is not required to do so by law, after MPs on the Public Accounts Committee published a damming report into the firm’s tax affairs after they had grilled top executives from the high street favourite, as well as directors of other high profile companies, including Amazon and Google.
In a statement on Sunday evening, Microsoft said: “Microsoft pays all due taxes, as required by law, worldwide. Microsoft subsidiaries are fully subject to tax in the jurisdictions in which we operate. We are regularly audited by major tax jurisdictions, which ensure the company is complying with all rules and regulations.”
As such, it’s imperative that Microsoft follows Amazon and Google’s vow not to pay a penny more than is required to under existing UK tax laws, because a tax system which is based on quasi-donations is, frankly, farcical and will only deter overseas firms from investing in Britain.
After all, which multinational would want to invest where they could suddenly find themselves, at the random whim of a group of MPs, having to pay more tax than is due by the laws of the land? A country that has a lynch-mob mentality is not an attractive prospect for investors.
It is complete nonsense that politicians have been ‘naming and shaming’ firms when there’s absolutely no suggestion that any laws have been broken. It also smacks of hypocrisy as the ones complaining about the “unfair” tax laws – the MPs – are the ones who have the power to change them.
Knowing that firms are acting unquestionably within the law, the committee of politicians, led by Margaret Hodge, resorted to slamming the likes of Starbucks, Amazon and Google as “immoral.” Again, this takes us into dangerous territory as tax, unlike charitable donations, cannot be a moral issue, as, by its very definition, it is a compulsory payment.
This means that Microsoft can no more decide how much tax to pay than its customers can decide how much to pay for its Internet Explorer software. In short, tax has to be an issue for policymakers to address, not individual firms taking arbitrary decisions to pay extra taxes to keep vote-seeking MPs satisfied.
If the laws do, indeed, need to be modified, than that is a decision for parliament. But until that happens, the bullying and ‘naming and shaming’ of a handful of high-profile, wealth and job creating firms by some politicians and well-meaning activists must be stopped.
Tax cannot be based on some vague moral notion. Microsoft, stand your ground.