Consistent with new requirements, Microsoft filed its Country-by-Country Report with the Australian Tax Office (ATO) for our fiscal year 2025 (1 July 2024 to 30 June 2025). This filing covers the countries and regions included under ATO rules and shows, for each one, our revenue, profit, number of employees, and income tax accrued and paid during the year.
We have provided this kind of information directly to tax authorities for several years under the Organisation for Economic Cooperation and Development (OECD) framework. It is now published to support transparency commitments, and we believe it is important to proactively address any questions these disclosures may raise, recognising that numbers on a spreadsheet rarely tell the full story.
Microsoft pays the taxes we owe in every country where we operate. We know there are strong views about whether companies are paying enough, and we believe providing this context leads to a more informed conversation.
Understanding country-by-country reporting
Country-by-country reporting is not widely understood outside tax and accounting circles. Some figures may look surprising at first, but a number that appears low or high in one country does not, on its own, tell the full story. Tax law differs from country to country, and there are two important things to keep in mind when reading the report.
First, the report follows Australia’s public country-by-country reporting requirements. It presents information by tax jurisdiction across the global group. Our Australian statutory accounts cover Australian entities or consolidated groups and are prepared under Australian Accounting Standards. Differences in reporting scope, presentation and financial year mean the figures may not be directly comparable.
Second, income tax accrued is the current income tax expense recognised for the reporting year, excluding deferred tax and provisions for uncertain tax liabilities. Income tax paid measures cash payments during the year, including payments relating to earlier years and withholding tax deducted from income received. The two figures can differ because tax expense and cash payments do not necessarily fall in the same reporting year.
Variations like these are a normal part of how large companies, both domestic and multinational, are taxed across borders, and they reflect an evolving tax landscape as well as a business that continues to change. We comply with every local rule that applies to us, and as those rules change, our reporting will change with them. Microsoft is committed to a tax structure that reflects where our people work, where we invest, and where functions, assets, and risks occur, and this has been a guiding principle.
How our investments support local economies
We understand that this discussion is not only about what the law requires or what a single tax line shows in a given year. For many people, it is also about a broader question of contribution: how companies support the countries where they do business. That contribution includes the taxes we pay, the capital we invest, the local jobs and infrastructure we support, and the economic activity created through customers and partners. In the year to 30 June 2025, Microsoft ranked second globally in the S&P for corporate income taxes paid, with a total of $28.7 billion. Importantly, this does not include payroll, GST, property, and other taxes paid in addition.
Taken together, our tax payments, capital investments, and partner ecosystem reflect a long-term commitment to the countries where we operate.
Our investments in digital infrastructure – most recently our A$25 billion commitment announced in April – are not only supporting the local digital economy, they are also contributing meaningfully through both taxation and capital expenditure. For the financial year 2025, EY-Parthenon attributes A$36 billion in national GDP contribution to Microsoft’s Australian presence. Moreover, Microsoft’s ecosystem supported the equivalent of 186,000 full-time employees in Australia, 8,100 locally owned partner businesses and enabled up to $22 billion in economic value through productivity gains.
From AI skills and training to digital infrastructure and partnerships with local organisations, we are investing in ways that support these economies beyond our direct commercial activity. At our core, we are building tools that help large enterprises, small and medium-sized businesses, institutions, and individuals become more productive and competitive, which strengthens their business and benefits the people they serve.
Investments in digital infrastructure are not only investments in technology ecosystems, but in national and local economies as well. They support jobs, strengthen supply chains, create opportunities for companies across many sectors, and help build the foundation for growth and economic competitiveness beyond the digital economy.
That is the broader context for this report. Tax is one important measure of contribution, but it is not the only one. Our investments, partnerships, infrastructure, and long-term presence in countries around the world also reflect a commitment to helping strengthen the economies and communities where we operate, today and for the future.