The company's Irish subsidiary, Microsoft Ireland Operations, generated £1.7bn in sales revenues in the UK but did not pay tax
US based Microsoft has been accused of not paying tax on £1.7bn of online sales in the UK, becoming the latest firm to allegedly avoid tax in the country after Google, Amazon.
The company's Irish subsidiary, Microsoft Ireland Operations reportedly did not pay corporation tax in the UK although it generated £1.7bn in sales revenues in the country.
According to a report by The Sunday Times, Microsoft showed its revenue generated by online sales of Windows 8 software to a Luxembourg unit avoid tax dues.
Microsoft however said that the company pays all due taxes, as required by law, worldwide.
"Microsoft subsidiaries are fully subject to tax in the jurisdictions in which we operate," the company said.
"We are regularly audited by major tax jurisdictions, which ensure the company is complying with all rules and regulations."
According to the Daily Mail, last year Microsoft's UK operation paid £19m in corporation tax, 2.8% of revenue totalling £663m.
In November this year, it was revealed that Google, Facebook, Twitter, Amazon and global coffee giant Starbucks were facing fresh scrutiny over their UK tax arrangements.
Google, Amazon and Starbucks are currently being probed by UK lawmakers for using complex accounting methods avoid tax liabilities in the country.