Microsoft paid more tax to Ireland than Washington last year

Microsoft paid more tax in Ireland than to the US federal government in its latest financial year, its latest annual report has disclosed.New fiscal reporting standards adopted by Microsoft have resulted in the company disclosing, for the first time, a breakdown of taxes paid in the US, Ireland and other foreign jurisdictions in its annual report.On Wednesday, the company said it paid $21.1 billion (€18.31 billion) in taxes globally in the financial year that ended June 2026.Of that, $6.5 billion (€5.64 billion) was paid in Irish corporation tax – 30 per cent of its total – compared to $6.25 billion of US federal taxes. It also paid $2.92 billion in state and local taxes in the US and $5.53 billion in other foreign jurisdictions.READ MOREBased on figures in a separate disclosure by Microsoft in recent weeks, the company’s Irish corporation tax paid grew by more than 16 per cent year-on-year.Microsoft said earlier this month that its Irish operation paid $5.6 billion of tax in the year to the end of June 2025. That was almost a fifth of total global taxes it paid in that year.At $6.5 billion, Microsoft’s tax expense for the year came close to eclipsing the amount paid by Ireland’s top corporate taxpayer, weight loss drug giant Eli Lilly, which paid a $6.6 billion Irish corporation tax bill in 2025.Microsoft made the disclosure about its taxes for the year to June 2025 as part of the European Union’s new country-by-country reporting directive. These measures mandate multinationals with global revenues of more than €750 million to disclose specific financial data, including how much tax was paid in EU states and their pretax profits.That filing also showed Microsoft’s Irish operation booked $47 billion in pretax profits, which accounted for 38 per cent of the group’s profits globally.No direct equivalent figure was included in Microsoft’s latest annual report, but a note in the accounts said “our foreign regional operating center in Ireland, which is taxed at a rate lower than the US rate, generated 81 per cent” of foreign income before tax.The company’s foreign income before tax was $62.34 billion, which means the Irish operation booked $50.5 billion of pretax profits in the year to June 2026.The new accounting standards, which require Microsoft to disclose taxes paid by jurisdiction in its annual report, were developed by the US-based independent body, the Financial Accounting Standards Board. It issued the new standards in late 2023 to “enhance the transparency and decision usefulness of income tax disclosures”.The new reporting guidelines have also resulted in a disclosure by Microsoft about the “foreign tax effect” on its earnings.[ Lioncor sell apartment block to housing body for €82mOpens in new window ]The company said its decision to book income in Ireland helped reduce its worldwide tax rate by 2.6 percentage points last year, which saved $4.3 billion that would otherwise have been paid in taxes. Microsoft said the saving came about because its Irish profits were taxed at a lower rate than the US rate of 21 per cent corporate tax rate.Microsoft, alongside Apple and Eli Lilly, is understood to be among the largest taxpayers in Ireland, with their collective contributions comprising almost half of the Republic’s corporation tax returns.These US companies have previously been criticised by US president Donald Trump for paying large tax bills abroad. His administration has committed through his “America first” policy to push companies to pay these taxes domestically.