Microsoft has agreed to pay $140 million to Chinese Government for tax evasion. China’s Xinhua official news agency recently reported that Microsoft must pay the Chinese government 840 million yuan ($137 million) in back taxes and interest, as well as more than 100 million yuan in additional taxes a year in the future. This is because Microsoft reported losses for six years in China of more than 2 billion yuan while Microsoft’s competitors enjoyed profits, and so the Chinese tax authorities concluded its behavior was unreasonable.
“In 2012 the tax authorities of China and the United States agreed to a bilateral advanced pricing agreement with regards to Microsoft’s operations in China, China receives tax revenue from Microsoft consistent with the terms of the agreed advanced pricing agreement”, said a Microsoft spokesman in an emailed statement to Recode.
However, Microsoft has now settled the issue by paying $140 million now and more taxes in the coming years.