Amazon shareholders will be able to demand more tax transparency

A sensitive topic will be invited to Amazon’s general meeting on Wednesday, May 25th: taxes. A group of investors intends to require the multinational company to disclose what it pays in taxes in each country in which it operates. The request comes at a time when Jeff Bezos is regularly accused, like other digital giants, of not contributing to the states’ finances in proportion to the income and profits they generate.

“This is the first time that shareholders have introduced a resolution on tax transparency,” said Jason Ward, of the Center for Accountability and Research on International Corporate Taxation (Cictar), who contributed to the project. “Amazon is making a lot of money with its ‘cloud’ business, particularly thanks to contracts that are being sourced from governments. So it’s legitimate to demand transparency.”

stock cop

Make such a decision did not earn in advance. The e-commerce giant has challenged the initiative with the Securities and Exchange Commission (SEC), the US stock market policeman, asserting that tax issues were part of “normal management” and therefore had no place on the General Assembly’s agenda.

But the Securities and Exchange Commission agreed with supporters of the decision, who view “company tax practices as critical financial elements.” In the letter sent in March to the chief market policeman, they noted that “strict tax practices could expose the company – and its investors – to greater oversight by the authorities and the risks of regulatory changes.” Another argument has been put forward: tax transparency is gaining ground, particularly in Europe, where country-specific reporting is applied to the EU and tax havens in 2023.

The signatories – an American Catholic congregation, an English public pension fund and an investment research and pension consulting firm (PIRC) – have the support of nearly a hundred foundations worth $3.6 trillion. These include asset managers such as Nordea, Robeco, La Banque Postale AM, Ecofi and Amiral Gestion.

This initiative is also supported by the Forum for Responsible Investment (FIR), which represents investors committed to governance and champions the idea of ​​corporate tax responsibility. In addition, the influential proxy consulting firm, Glass Lewis, is recommending a vote in favor of the resolution, unlike its rival ISS.

Concretely, a green light from the Securities and Exchange Commission (SEC) will allow shareholders to decide whether they want Amazon to provide them with a report detailing taxes, income, profits, and workforce, from country to country, around the world, according to the standard set by Global in 2019. Reporting Initiative (GRI).

Corporate tax increase

Amazon’s board sees this as a threat: it has warned that it could force it to provide strategic information to its competitors. The Board maintains that the GRI standard on which proponents of the resolution were based does not refer to the United States. As evidence, he points to the list of European groups that apply: AngloAmerican, Philips, Randstad, Vodafone, Royal Dutch Shell and Orsted.

He insists on the fact that Amazon has supported a plan to raise corporate taxes and reform international taxation under the auspices of the Organization for Economic Co-operation and Development. It also states that the group already publishes the amounts of taxes and fees paid in the United States, the United Kingdom, Italy, Spain and France. Sure, Amazon has made efforts in recent years – the company revealed it paid €310 million in direct debt in France in 2020 – but details are still not available.

However, the decision has little chance of obtaining a majority. “If the shareholder vote, other than the leaders, exceeds 15%, it would nonetheless send a very strong signal,” estimates Katie Hepworth, PIRC Cabinet Secretary. This will put pressure on companies that are reluctant to be more transparent, particularly in the technology and pharmaceutical sectors. So Amazon GA will be followed with the most attention.

Leave a Comment