We all know by now that Microsoft is buying LinkedIn, but what we don’t know is that the Redmond giant is falling short of funds for buying the social network and wants to take a loan. Well, the company is not technically having shortage of money, as it has got over $100 billion in cash. So why the fuss?
Well, to bring in the money to the US, Microsoft would have to pay $9 billion in taxes to the US government. It’s an unavoidable rule that requires the company to pay 35% of the total “imported” money in tax to the government. So to save that money, which is of course a huge sum, Microsoft wants a loan to buy LinkedIn.
The company has not yet disclosed the exact amount that it wants to borrow for buying LinkedIn. But the strategy to save huge amount of cash by sidestepping US taxes also invites criticism from politicians in the US who condemn such practices adopted by tech giants to avoid taxes. Of course, Microsoft isn’t alone, and many companies in the past have done so.
At least 97% of Microsoft’s cash is stashed in overseas accounts, and the company clearly wants to reap the advantages of the currently low rates. Of course, this is nothing illegal and it’s what anyone with such a gigantic business would do. These type of sidestepping schemes do raise questions as to why the US tax code does not have any laws against such practices.