Amazon shareholders are urging the tech giant to enhance tax transparency. A group of twenty-four investors, including Nordea and Royal London asset managers, as well as pension funds, are requesting that Amazon adopts a new reporting standard and produces a transparency report aligned with the Global Reporting Initiative’s tax standard.

These shareholders believe that aggressive tax strategies expose companies and investors to the risk of increased scrutiny from tax authorities and potential changes in taxation regulations. By implementing a new tax reporting standard and offering more transparency in tax disclosures, Amazon can mitigate these risks and protect the interests of its investors.

The call for greater tax transparency comes at a time when countries worldwide are striving to protect their tax bases and prevent harmful tax practices. By adhering to the GRI tax standard and providing public disclosure of financial, tax, and worker information on a country-by-country basis, Amazon can demonstrate its commitment to responsible and ethical tax practices.

Over 100 groups, including the New York City Office of the Comptroller and the Universities Superannuation Scheme, the largest private pension fund in the UK, have signed a letter advocating for tax transparency. This letter will be sent to the U.S. Securities and Exchange Commission in the coming week.

It remains to be seen how Amazon will respond to this demand for increased tax transparency, as the company has yet to offer any comment. Nevertheless, with mounting pressure from shareholders, Amazon may need to carefully consider its approach to tax reporting to uphold investor trust and evade potential regulatory issues.

This request for tax transparency is not an isolated occurrence. In December, the Greater Manchester Pension Fund and the Oblate International Pastoral Investment Trust filed a shareholder proposal urging Amazon to implement the new GRI Tax Standard. These actions highlight the growing concern among shareholders regarding tax practices and the significance of heightened transparency in this realm.

As the largest online retailer globally, Amazon has faced scrutiny over its tax practices in recent years. In 2020, the company faced backlash when it was revealed that it paid minimal taxes in Europe despite substantial revenues generated in the region. This triggered demands for greater tax accountability and transparency from the tech giant.

Overall, the call for increased tax transparency from Amazon shareholders mirrors a larger trend in corporate governance. Investors are now giving greater priority to environmental, social, and governance (ESG) factors when making investment decisions. Tax transparency is viewed as a crucial element of corporate responsibility and can contribute to building trust and confidence among shareholders and stakeholders.

As the discourse surrounding tax transparency continues, it will be intriguing to observe how Amazon and other tech giants respond. The drive for enhanced accountability in tax practices is likely to persist as investors and regulators increasingly demand greater transparency from companies operating globally. By adopting responsible tax practices and providing clear and comprehensive tax disclosures, companies like Amazon can showcase their dedication to ethical business conduct and maintain the trust of their shareholders.

Useful Links:
1. Global Reporting Initiative’s Tax Standard
2. U.S. Securities and Exchange Commission