Microsoft owes the US Treasury $28.9 billion (£23bn) in again taxes, plus penalties and curiosity in response to the Internal Revenue Service (IRS).

The determine, which Microsoft disputes, stems from a long-running IRS investigation into how Microsoft allotted its earnings amongst international locations and jurisdictions within the years 2004 to 2013, in response to a securities submitting

Critics of the apply, referred to as switch pricing, argue that corporations often use it to minimise their tax burden by reporting decrease earnings in high-tax international locations and better earnings in lower-tax jurisdictions.

Microsoft, which relies in Redmond, Washington, stated it adopted IRS guidelines and can enchantment the choice throughout the company, a course of anticipated to take a number of years.

The firm stated it has since modified its practices in order that “issues raised by the IRS are relevant to the past but not to our current practices,” in response to a Microsoft weblog.

Microsoft stated it believes that any taxes owed after the audit can be decreased by as much as $10 billion (£8bn) based mostly on tax legal guidelines handed by Donald Trump.

Microsoft shares dropped barely in aftermarket buying and selling, falling $1.42 (£1.15) to $331 (£269).