The Amazon share price dropped by 3.2% yesterday after the US Securities and Exchange Commission backed shareholders demanding a vote on greater transparency from the company around where and how it pays taxes. The regulator said attempts by the e-commerce and cloud computing giant, worth $1.62 trillion, to stifle the campaign were “out of step” with investors. Amazon had requested the SEC’s permission to exclude the motion from its upcoming AGM.
It’s only the second time the SEC has sided with a shareholder proposal over tax after such a move has been challenged by the company and places increasing pressure on Amazon to be more upfront about its tax payments. Amazon had expressed the belief it was within its rights to stop the vote. However, the SEC told the company’s lawyers it was “unable to concur” with that position.
Last year Amazon paid $2.3 billion in federal income tax in the USA and £492 million in the UK in 2020 but the company does not provide the same information for taxes paid in other territories it generates revenues from. That’s raised questions on exactly how much tax finds its way back to the countries whose economies support the spending power of consumers. The tax paid in the UK in 2020 represents around 2.3% of the £20.63 billion generated in revenues that year.
A group of Amazon investors, reportedly including the Greater Manchester Pension Fund, want Amazon to start to publish a granular breakdown of its country-by-country finances, revealing its approach to tax payments. The demand is that the company’s reporting is brought into line with new taxation standards laid out by the Global Reporting Initiative, an international independent standards organisation that helps businesses, governments and other organizations understand and communicate their impacts on issues such as climate change, human rights and corruption.
Amazon’s position is that the proposal is not relevant as its tax structure is related to “ordinary business” operations and that it already publishes “extensive and detailed” information on tax paid in the U.S. as well as overall payments in the UK, France, Spain and Italy. And that direct shareholder oversight of tax payments would be impractical.
The SEC, however, did not agree, denying Amazon’s request to block the vote because
“in our view, the proposal transcends ordinary business matters.”
Public opinion is solidifying behind the concept of a global tax system that ensures all companies “fairly contribute” through tax payments in markets they earn in. Katie Hepworth of the advisory service Pirc that is supporting the shareholders calling for greater transparency from the company commented:
“Amazon has again shown itself to be out of step with investor and regulator expectations on corporate tax practices.”
