SEC upholds shareholder proposal on Amazon’s tax transparency

The US Securities and Exchange Commission (SEC) has upheld a shareholder proposal that called for Amazon to publicly disclose global tax practices, payments and risks to investors.

In December 2021, Amazon submitted a no action request to the SEC, challenging the shareholder proposal filed by the OIP Trust and Greater Manchester Pension Fund with the support of Pensions & Investment Research Consultants (PIRC).

The shareholder proposal requested that the company disclosed global tax practices by reporting in line with the new Global Reporting Initiative Tax Standard, including tax and other basic financial information on a country-by-country basis.

PIRC noted that this was only the second time that a shareholder proposal on tax has survived an SEC challenge and said the decision “reflects global regulatory momentum and changing investor expectations regarding tax transparency”.

The proposal was filed as part of a new initiative launched in collaboration with the Centre for International Corporate Tax Accountability and Research.

The initiative aims to facilitate active engagement with companies in sectors deemed ‘high risk’ for aggressive tax avoidance, alongside sectors with significant exposure to government contracts and public funding.

Responding to Amazon’s challenge, investors with $3.6trn in assets under management wrote to the chair of the SEC in March 2022 expressing support for the shareholder proposal and its request for greater tax transparency.

Greater Manchester Pension Fund vice chair, Gerald Cooney, described the decision as a “fantastic victory for stewardship and good governance”.

“The Greater Manchester Pension Fund takes its responsibilities very seriously in looking after the pension promises of more than 370,000 members, and its fiduciary duty in looking after the members’ interests and the assets of the fund to employers and taxpayers, who underwrite pension liabilities,” he continued.

“We are committed to using our voice as responsible activist investors to engage companies on their tax planning approach to create long-term value for beneficiaries leading to sustainable benefits for the economy, the environment and society.

“Aggressive corporate tax avoidance can be a source of regulatory, financial and reputation risk to companies and their investors. While it may deliver short-term benefits to shareholders, this can come at a cost to long-term shareholder value and at a cost to public service provision by undermining public finances and create greater societal inequality.”

PIRC responsible tax lead, Katie Hepworth, added: “Globally, there is growing government and investor momentum to reform the global taxation system so that it is fit-for-purpose and will ensure that companies fairly contribute to the revenue of the countries in which they operate and earn profit.

“These developments in global tax reform will increase risks for companies operating at the limits of the law. Investor understanding of a company’s relative risk profile and appetite is hampered by a lack of transparency.”

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