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Will Amazon Agree to Country-by-Country Reporting?

6th January 2022

Tax authorities may love country-by-country reports, but multinational companies? Not so much. But that didn’t stop Greater Manchester Pension Fund and the Oblate International Pastoral Investment Trust—two major stakeholders in Amazon—from requesting that the online retail giant begin reporting its tax information in a country-by-country manner, adhering to the Global Reporting Initiative’s (GRI) standards. The investment research consultancy representing the shareholders emphasized that tax transparency is extremely important to investors and that certain “artificial” structures used to lessen corporate tax burdens creates significant risks for shareholders. If that weren’t enough of a reason to force the country-by-country issue, there’s always Pillar Two. In October, 136 jurisdictions signed on for the OECD’s two-pillar global tax revamp, which includes for companies reaching a certain threshold, Pillar One, a means of allocating profits to jurisdictions based on where customers reside—not on where a company is physically located. Pillar Two is a 15% global minimum tax, which will be calculated on a country-by-country basis. Many companies have been down this road before, as the OECD brought the advantages of exposing country-by-country reporting to light in the 2015 BEPS Action Plan. The good news is, the GRI’s standard requires less information and also offers some wiggle room in terms of calculations. But if income tax payments are out of sync with a country’s statutory tax rate, then Amazon—like other companies—will have some explaining to do.