Microsoft is in a $29bn back taxes dispute with the US Internal Revenue Service (IRS). The IRS claims that Microsoft shifted profits to lower-tax jurisdictions to avoid paying taxes in the US. Microsoft denied these allegations and said it would contest the IRS’s claims.

The dispute concerns Microsoft’s use of a tax structure known as a “transfer pricing model.” Multinational companies use transfer pricing models to allocate profits between different countries. The IRS claims that Microsoft’s transfer pricing model does not accurately reflect the value of the services that Microsoft provides to its customers in the US.

Microsoft has said that it follows the tax laws of its operating countries. The company has also said that it pays significant taxes in the US. In 2022, Microsoft paid $15.8bn in federal taxes in the US.

The outcome of the dispute between Microsoft and the IRS could have a significant impact on other multinational companies. If the IRS is successful, it could lead to other companies paying more taxes in the US.

Tax experts are closely watching the dispute. The IRS has been taking a more aggressive approach to enforcing tax laws in recent years. The dispute between Microsoft and the IRS could be a test case for the IRS’s new approach.

Microsoft is in a $29bn back taxes dispute with the US IRS. The dispute concerns Microsoft’s use of a tax structure known as a “transfer pricing model.” Microsoft has denied the IRS’s allegations and said that it will contest the IRS’s claims. The dispute’s outcome could significantly impact other multinational companies and be a test case for the IRS’s new approach to enforcing tax laws.