Boards beware: tax transparency is back on the agenda, with shareholders demanding the biggest companies come clean on how much they pay and where.

In the crosshairs this week is Amazon, which faces a shareholder motion to produce a “tax transparency report” that directly links the payment of a “fair share” of tax to a societal contribution.

The shareholders worry Amazon currently holds back from disclosing the tax it pay overseas.

“Currently, Amazon does not disclose revenues, profits or tax payments in non-US markets, challenging investors’ ability to evaluate the risks to our company to taxation reforms, or whether Amazon is engaged in responsible tax practices that ensure long-term value creation for the company and the communities in which it operates,” the motion reads.

“Amazon’s approach to taxation has been repeatedly challenged by tax authorities globally. In 2021, Amazon was singled by President Biden as having paid no federal corporate income tax in the UK.”

Shareholders want Amazon to use the Global Reporting Initiative’s Tax Standard to disclose its tax arrangements. They say Amazon is already reporting its tax affairs privately to authorities in the OECD so the burden of going public is “negligible”.

Big corporations under fire

The resolution echoes long-running concerns about the tax paid by large corporates, especially those in the tech industry, around the world. Ten years ago a committee of MPs in the House of Commons heavily criticised Amazon, along with Starbucks and Google, for their tax practices—and still the wrangling continues.

There have been initiatives, but they appear to be reaching a peak as increasingly tax transparency is integrated into the ESG agenda. In November the European Parliament passed the Country by Country Reporting Directive meaning every EU state will now be expected to implement a new tax reporting regime by 2023.

The measures require multinationals with revenue above €750m to disclosure the amount of tax they pay in each EU country. The law also hits foreign companies with EU operations.

According to Paul Tang, chair of the parliament’s sub-committee on tax matters: “This directive, alongside other tax transparency measures, could be one of our strongest tools against complex rules that have allowed avoidance to persist in the EU.”

‘Global tax abuse’

The Tax Justice Network estimates countries are losing around $483bn in tax a year to “global tax abuse”. Their report, issued in November, lays the blame at the door of multinationals.

“Their tax abuse is a first-order global economic issue, depriving governments of tax revenues, increasing inequalities between and within countries and undermining smaller and domestic businesses that generate the majority of employment.”

Amazon has not been spared the ire of President Joe Biden. Last year he rounded on the company for not paying federal income taxes. “I don’t want to punish them but that’s just wrong,” he said.

Campaigners have targeted the tax affairs of multinationals for some time. But as tax fairness becomes a part of ESG, investors will increase their involvement. Expect more pressure on boards.