Payments for the firm's new Windows 8 operating system are being handled through an office in Luxembourg - where corporation tax is 21 per cent - before being transferred to Microsoft's European headquarters in Dublin. Ireland's corporation tax rate is just 12.5 per cent, compared to a main rate of 24 per cent in the UK.
Microsoft's Irish registered company has logged £1.7bn of revenues from the UK, though the profit figure, on which corporation tax is levied, is not clear.
Microsoft said last night that it pays all due taxes. The firm pays UK corporation tax rates on other parts of its business.