Amazon Facing Investor Pressure over Tax Transparency

Today latest news 2022 Amazon Facing Investor Pressure over Tax Transparency. Groups in charge of $3.6 trillion in assets will pursue a shareholder resolution at their annual conference. The proposal, if passed at Amazon’s AGM, would radically change the company’s tax reporting. Bloomberg/Michael Nagle

Amazon is under pressure from twenty-four institutional investors to boost transparency about where and how much it pays in taxes throughout the world.

The shareholders, which also include investment firms Nordea and Royal London as well as a number of large European and US pension funds, are attempting to get a shareholder resolution introduced at the company’s annual meeting this year that, if passed, would significantly overhaul the company’s tax public disclosure of information.

Catholic Investment Fund

In December, a Catholic investment fund and a UK public retirement scheme introduced a resolution urging that Amazon adopt a new reporting standard on tax policies.

Amazon, which has been chastised in the past for its tax openness, is appealing the resolution.

It wrote to the US Securities and Exchange Commission in January, requesting permission to omit the resolution from voting at its upcoming annual general meeting.

Amazon maintained that its tax affairs are a routine business matter and so excluded from shareholder resolutions.

The investors who support the move, who jointly manage $1.2 trillion in assets, are pushing back and pressuring the SEC to allow the idea.

“A company’s tax methods are financially material,” they said in a letter to the body, which was viewed by the Financial Times and will be sent early this week.

“Aggressive accounting tactics can expose a corporation — and its investors — to higher scrutiny from tax authorities, adjustment risks, and increased vulnerability to changes in tax legislation as countries seek to defend their tax bases from harmful activities,” says the report.

Global Reporting Initiative’s

The shareholder resolution calls on Amazon’s board to issue a tax transparency report to shareholders, “at reasonable expense and excluding confidential information” in accordance with the Global Reporting Initiative’s (GRI) tax standard.

Companies must make public their business operations, revenues, profits, and taxes paid in each country they operate in under this approach. Outside of the United States, Amazon does not currently publish its revenues, profits, or tax payments on a country-by-country basis.

According to the investors, the enhanced disclosure would impose a “minimal” compliance cost on Amazon because multinationals are already obligated to give country-by-country tax information to the US tax department under existing international regulations.

The benefits of these disclosures to investors “would far outweigh any increased compliance,” they argued. “Amazon currently offers substantial and precise disclosure regarding its income tax contributions…”, according to the company.

It “also has publicly reported on its overall tax contributions in the United States, as well as the United Kingdom, Italy, France, and Spain” in its publicly filed annual and quarterly reports to the Commission.

The letter was signed by more than 100 organizations, including the New York City Office of the Comptroller, which controls the city’s $274.7 billion in public pension funds, and the £82 billion Universities Superannuation Scheme, the UK’s largest private pension fund by assets.

The Missionary Oblates of Mary Immaculate, a Catholic investment fund, and the Greater Manchester Pension Fund submitted the initial shareholder resolution. The letter was coordinated by Pirc, a shareholder advisory body.

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