British proxy advisors Pensions & Investment Research Consultants (PIRC) are urging Microsoft to be more transparent in the way it reports global tax and financial transactions. In a shareholder resolution, PIRC demands Microsoft becomes more open about its tax compliance and financial decisions.
Specifically, the resolution is asking for clearer information about what Microsoft does outside of America.
In terms of tax, the resolution is essentially telling Microsoft to explain if it pays its taxes fairly around the world. Furthermore, shareholders want to know if Microsoft complies fully with regulations in different markets, including with its financial transactions.
Katie Hepworth, responsible tax lead for Pensions & Investment Research Consultants Ltd, describes the resolution in a post:
“Technology is a sector that has historically been characterized by tax avoidance, particularly for large multinationals like Microsoft. Our decision to escalate engagement at tech companies through the filing of shareholder resolutions also reflects the increased risk to investors of tax avoidance strategies, due to the historic OECD global tax reforms.”
Concerns
Investors have special concerns about regulatory “investigation and intervention” around Microsoft's financial and tax transactions. Specifically, Microsoft has apparently not generated or sent a tax transparency report that meets the standards of the Global Reporting Initiative (GRI). Under the terms of the resolution, the company would need to provide such a report.
Microsoft currently does not disclose its revenue or profits for specific markets outside the United States. Furthermore, the company aggregates all its non-US tax payments, making it difficult for investors to see if the company is meeting regulations.
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