Microsoft fined $140m for evading tax in China

Microsoft has reportedly been fined $140 million (£89 million) by the Chinese government for failure to pay its taxes.

A report from the official Chinese news agency Xinhua did not refer to the Redmond-based company by name, yet said that a company with a name beginning with “M” and with similar financial details had been fined.

Xinhua accused Microsoft of spiriting away all of its profits to offshore bank accounts while its China-based businesses were made to look as if they were taking losses. Microsoft has replied to the allegations, stating that the $140 million was a “bilateral advanced pricing agreement” rather than unpaid tax.

“In 2012, the tax authorities of China and the US agreed to a bilateral advanced pricing agreement with regards to Microsoft’s operations in China,” Microsoft said, according to the Financial Times.

“While we cannot confirm that Microsoft is the company in question in a recent Xinhua report, China receives tax revenue from Microsoft consistent with the terms of the agreed advanced pricing agreement.”

The fine for company “M” is just part of an ongoing battle between tax authorities and foreign multinationals, according to Xinhua. However, its assertions that Microsoft is the biggest tax evader in China have been disputed.

Microsoft is also under scrutiny from a Chinese antitrust investigation into its local business practices. It has been suggested that the case was only opened due to Microsoft cutting its support for XP in the country back in April.