HP and Microsoft highlighted in US tax investigation

HP and Microsoft have been used as examples of tax avoidance by a US Senate committee which is determined to highlight the extent to which the tech sector is exploiting legal loopholes to reduce their payouts

The tech sector in the US has come under the spotlight for tax avoidance with Microsoft and Hewlett-Packard being accussed of using offshoring arrangements to avoid paying what they owe the American tax authorities.

Tax avoidance has been on ongoing issue on this side of the Atlantic with Jimmy Carr the most high profile example of those that use loopholes to get out of paying their dues.

According to a US Senate committee the problem is also prevelent in the tech sector and the permanent subcommittee on investigations said that companies were using royalties and licenses fees in overseas tax havens to reduce their tax bills.

The committee subpoenaed internal documents from the companies and interviewed executives at both Microsoft and HP. Both vendors have denied any wrong doing.

The Senate committee claims that $1.7bn of earnings have been stockpiled off shore and it aims to use HP and Microsoft as examples in its attempt to highlight the problems in the tech sector.

"We will examine the actions of two U.S. companies – Microsoft and Hewlett-Packard – as case studies of how U.S. multinational corporations, first, exploit the weaknesses in tax and accounting rules and lax enforcement; second, effectively bring those profits to the United States while avoiding taxes; and third, artificially improve the appearance of their balance sheets," the committee stated.

Although HP and Microsoft are in the spotlight the committee also took aim at some of the other household names in the tech sector pointing out that others were also deferring taxes including Apple and Google.

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