A US Senate committee has alleged that technology giants Microsoft and Hewlett-Packard avoided billions in US taxes over the past three years by transferring profits to offshore jurisdictions.

According to Senator Carl Levin, chairman of the Senate Permanent Subcommittee on Investigations, several US multinational companies have exploited the current tax system to "engage in gimmicks to avoid paying taxes they owe."

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Singling out companies from the technology industry, an industry that is rampant with tax avoidance practices, a report released by the committee details how Microsoft used transactions with subsidiaries in Puerto Rico, Ireland, Singapore and Bermuda, which are low or no tax jurisdictions.

"From 2009 to 2011, by transferring certain rights to its intellectual property to a Puerto Rican subsidiary, Microsoft was able to shift offshore nearly $21 billion, or almost half of its US retail sales net revenue, saving up to $4.5 billion in taxes on goods sold in the United States, or just over $4 million in US taxes each day," said the Senate report.

Using similar schemes, Levin said, Apple avoided taxes on $34.5 billion between 2009 and 2011, and Google has dodged taxes on $24 billion.

At the same time, the committee revealed that Hewlett-Packard used a series of revolving short-term internal loans that allowed the company to tap its offshore cash for domestic operations without paying taxes.

While Levin stopped short of accusing the companies of acting illegally, he said he was "highly dubious" that HP was acting in compliance with US laws governing corporate tax.

Commenting on the findings, Levin said:

These loophopes and abuses exact a tremendous cost. What these gimmicks do is shift the burden of taxes onto citizens who don't use armies of lawyers and accountants.

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Officials at Microsoft and HP denied any wrongdoing. In an email interview with CNBC, Microsoft urged lawmakers to reform and simplify the tax code.

A representative for Microsoft said:

In conducting our business at home and abroad, we abide by US and foreign tax laws. That is not to say that the rules cannot be improved - to the contrary, we believe they can and should be.US international tax rules are outdated and not competitive with the tax systems of our major trading partners. We believe the US should reform its tax rules to support the ability of worldwide American businesses to compete in global markets and invest in the US.

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