Offshore Tax Havens Saved Microsoft $7 Billion in Taxes

Photo: IBN Live

(CNN Money) By Jennifer Liberto - Microsoft has saved nearly $7 billion off its U.S. tax bill since 2009 by using loopholes to shift profits offshore, a Senate panel said in a report released Thursday.

Hewlett-Packard also avoided paying taxes through a series of loans, some spanning 30 months, that shifted billions of dollars between two offshore subsidiaries, according to the Senate panel.

The Permanent Subcommittee on Investigations reviewed tax loopholes used by dozens of companies in the high-tech industry to shift profits offshore. But it focused on moves by Microsoft and Hewlett-Packard, according to Sen. Carl Levin, the Michigan Democrat who runs the panel.

The Republicans on the panel, including ranking member Tom Coburn of Oklahoma, said they support the report while stressing it found nothing illegal. Coburn said the report shows the need for reforms to the tax code and lower corporate tax rates.

The Senate investigation, which included subpoenas and voluntary correspondence with the companies, provided an in-depth look into how the companies set up and use overseas tax shelters, as well as the impact on government coffers.

Levin acknowledged that Microsoft has broken no laws. But he blamed a loose tax code, Congress and tax officials for allowing the loopholes. Read full story