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Will Amazon’s Investors Make the Rules on Tax Transparency More Clear?

12th April 2022

Give them an inch and they take a foot—that’s how multinational companies must feel when it comes to tax transparency, a phrase that has been transforming the transfer pricing and global tax world. But just how transparent does a company need to be? That’s precisely what Amazon is about to find out. While the online retail giant reports revenue, profits, and tax liabilities in quarterly and annual reports to the Securities and Exchange Commission (SEC), investors are asking for even more disclosure—in fact, at the end of 2021, more than 100 asset management groups asked the SEC to back a shareholders vote to demand Amazon adhere to Global Reporting Initiative’s standards and disclose where and how much it pays in taxes on a country-by-country basis. Amazon’s legal team tried to convince the SEC that the information was subject to a shareholder resolution exemption. But last week, the SEC backed the investors and on May 25 at the company’s annual general meeting there will be a shareholders’ vote to determine just how transparent Amazon has to be. 

According to the Financial Times, this is one of the first times a regulator has supported investors on disclosing tax information. But given the scrutinous global tax landscape, it makes sense that investors want to know more. Aggressive tax practices can expose a company and its shareholders to increased tax and transfer pricing scrutiny, making them more vulnerable to exorbitant adjustments. Amazon may be on the hook here, but if investors win the vote in May, it’s not just the tech giant that will have to be transparent—it means investors will likely put the pressure on other MNEs, too.