INTERNATIONAL TAX: Microsoft, Cisco Shareholder Votes Demonstrate Increasing Investor Demand for Tax and Offshore Transparency.

As published on thefactcoalition.org, Wednesday 21 December, 2022.

Last week, Microsoft investors representing more than $305 billion voted in favor of a shareholder proposal calling on the company to publicly disclose information about its offshore operations and tax practices on a country-by-country basis at Microsoft’s annual general meeting. The call for public country-by-country reporting (PCbCR) attracted the most support of any shareholder proposal put up for consideration at the meeting. The Microsoft outcome follows a similar vote this month on a shareholder proposal at Cisco’s annual meeting that garnered support from 27 percent of shareholders, representing $38.3 billion.

“These votes are just the latest call from investors who increasingly recognize that they are throwing darts blindfolded when it comes to assessing the material risks posed by the opaque offshore practices of the companies they own,” said Ryan Gurule, Policy Director of the FACT Coalition. “These investors should have more information at the ready to understand their exposure – whether that be from increased tax enforcement or tax reform risks, or from geopolitical concerns, such as the recent corporate withdrawal from Russia after its invasion of Ukraine.”

Both the Microsoft and Cisco proposals request that the corporation’s respective boards issue a PCbCR report in line with international best practice standards developed by the Global Reporting Initiative (GRI). Adoption of the standard would mean that these corporations would make certain data such as revenue (broken down on a third-party and intra-party basis), income (or loss), number of employees, cash taxes paid, taxes accrued, and tangible assets available to investors and the public on a country-by-country basis.

This May, shareholders took the first vote of this kind on tax transparency during Amazon’s annual shareholder meeting, garnering support from 21 percent of independent shareholders representing $144 billion in shares. FACT Coalition member Oxfam has worked with other investors to file similar shareholder proposals at Chevron, Exxon Mobil, and ConocoPhillips for meetings that will occur in spring 2023. These resolutions come on the heels of two U.S.-based extractive companies, Hess Corporation and Newmont Corporation, becoming the first large American MNEs to voluntarily publish international tax data in line with the GRI standards in summer 2022.

“The fact of the matter for multinationals publicly filing in the U.S., like Microsoft and Cisco, is that public country-by-country reporting is no longer a matter of ‘if’, but ‘when and ‘how’,” said Gurule. “Jurisdictions like the European Union and Australia are already moving on their own mandatory disclosures, which will cover U.S. filers. In the U.S., the Financial Accounting Standards Board is also considering greater disaggregation of key offshore information, including taxes for public filers that use U.S. generally accepted accounting principles. In light of this global momentum, multinationals and regulators alike should heed the calls of investors, policy makers, and other users of financial statements, and move toward public country-by-country reporting in line with GRI standards to ensure that there is symmetrical information for markets and policy conversations surrounding tax practices.”