Software giant Microsoft said today that it pays Chinese taxes "consistent" with a China-US bilateral agreement, following a cryptic media report that a foreign company with similarities to it agreed to settle a multi-million dollar bill for back taxes.
The official Xinhua news agency, in a Chinese-language report published on Sunday, said that a well-known US-based company, long among the world's top 500 corporations and with operations in China had agreed to pay USD 136.9 million in back taxes and interest over an unspecified period.
The report also said that the company agreed to pay additional taxes of more than 100 million yuan a year in the future. Xinhua said the tax calculation was based on current sales.
It did not identify the company by name, simply referring to it as "M Company."
That, as well as other identifiers such as the company having established a business in Beijing in 1995, led to foreign media speculation it was referring to Redmond, Washington-based Microsoft.
"The description matches, at least in part, that of US software giant Microsoft, a Fortune 500 company that set up its Chinese subsidiary Microsoft (China) Co. In Beijing in 1995," Dow Jones Newswires reported.
Microsoft, in an emailed statement to AFP, said it could not confirm that it is the corporation mentioned by Xinhua.
But the company emphasised that it "adheres carefully to the laws and regulations" in all countries where it does business and that it cooperates with tax authorities to ensure it is compliant with local law.
It also said that in 2012 China and the United States agreed a "bilateral advanced pricing agreement with regards to Microsoft's operations in China".
The accord is "an acknowledgement by both countries that Microsoft's profits are subject to the appropriate tax in China", Microsoft said.
"While we cannot confirm that Microsoft is the company in question in a recent Xinhua report, China receives tax revenue from Microsoft consistent with the terms of the agreed advanced pricing agreement."
Microsoft has been facing a Chinese government investigation for alleged "monopoly actions" regarding products such as its flagship Windows operating system, used on the majority of computers in China.
