According to a Huffington Post report, Microsoft would be financing its USD7.2 billion acquisition of Nokia's handset business in cash through USD60 billion of its holdings offshore.
The report speculated this move of the US multinational tech giant was to circumvent the clutches of Internal Revenue Service. Microsoft reportedly has 89% of more than USD68 billion of its cash offshore. Microsoft came second to Apple, who has 69% of its USD137 billion in cash overseas. A St. Louis Federal Reserve report in January indicated that cash reserves held by US companies overseas helped explain why United States was slow to recover from recession.
A US Senate committee report was also cited, saying that Microsoft moved USD21 billion between the years 2009 and 2011. The strategy, called "transfer pricing", made the tech company avoid paying sales taxes inland amounting to US4.5 billion. The same report also said Microsoft resorted to transferring income from royalties to countries which had lower tax fees like Ireland and Singapore.
The Nokia deal would mark another great tax move for Microsoft, as Finland has plans to reduce corporate tax from 24.5% to 20%.
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