The Sunday Times has accused Microsoft of funneling £8 billion of revenue to Ireland since 2011 and thereby avoiding £100 million in UK corporation tax.
The corporation tax rate in Ireland is 12.5%, compared with 20% in the UK.
Microsoft takes advantage of the so-called advance pricing agreements to agree on the allocation of profit between various countries. The deal has the approval of the HM Revenue & Customs and runs from 2011 to 2017.
Microsoft is not alone in its special arrangement with the MHRC, with more than 140 tax deals having been arranged between HMRC and some of the world’s biggest companies, the Sunday Times investigation found.
The UK public has however become increasingly intolerant of tax avoidance schemes, with such a ground swell of opposition recently forcing Facebook to agree to pay tax in UK on their UK sales, after paying only £4,327 in tax in 2014, despite an annual profit of £1.9bn.