Microsoft's Irish business has emerged as a significant profit center, reporting $47 billion in profits last year. This translates to over $7 million in pretax profit per employee in Ireland, which is 13 times the company's worldwide average. This concentration of profits in the low-tax jurisdiction of Ireland was revealed through new European Union reporting requirements, which mandate companies to publicly disclose country-by-country tax details.
Under these new EU rules, large companies must submit reports showing revenues, pretax profits, and tax payments for various jurisdictions. Microsoft, with a fiscal year ending June 30, was among the first to comply, publishing its data for fiscal year 2025. The company recorded 38.1% of its total pretax profit in Ireland, despite only 3% of its global full-time employees being based there. This led to Microsoft paying $5.6 billion in corporation tax to Ireland, representing just under 20% of its global total, at a current tax rate of 14% on its allegedly Irish profits.
These disclosures raise questions about corporate tax avoidance, as companies like Microsoft appear to be shifting profits to low-tax havens. For instance, Microsoft's 34 employees in Luxembourg reportedly generated $283 million in profit with a tax rate of 3%. Similarly, Procter & Gamble's one employee in Luxembourg generated $114 million in profit with a 0% tax rate. While these new rules do not require companies to create new data, they make existing information public, allowing investors and the public to scrutinize corporate tax practices and potentially influence consumer and investment decisions.
