Microsoft has received a demand for $28.9bn in back taxes from the US Internal Revenue Service, marking an escalation of one of the biggest-ever corporate tax disputes.
The demand for extra taxes, along with penalties and interest for late payment, is the latest twist in a case that has long stood as the most notable challenge to a common form of international tax planning used by many big US tech companies to greatly lower their tax bills.
The software company said on Wednesday that it had received notices from the IRS seeking to adjust its tax liability for the decade between 2004-13. The agency had been investigating Microsoft’s use of transfer pricing, a practice that critics claim is used by companies to unfairly shift profits to low-tax countries to minimise their liabilities.