Investors Representing More Than $305 Billion Back Public Reporting Proposal

WASHINGTON, DC – 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.”

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Notes to the Editor: 

• Click here for Microsoft’s 8-K SEC filing that reflects vote totals for the tax transparency shareholder proposal. Click here for Cisco’s 8-K SEC filing reflecting the same.
• To understand how public country-by-country reporting can mitigate tax, geopolitical, and other material risks to investors, read FACT’s recent report, “A Material Concern: The Investor Case for Public Country-By-Country Reporting”.
• For more information on Australia’s PCbCR proposal, click here. The SEC is also considering action on PCbCR in light of mounting pressure from investors and policymakers, while the Financial Accounting Standards Board (FASB) just last month signaled its intent to recommend greater tax transparency from MNEs through its tax disaggregation guidance project. FACT has weighed in on certain aspects of the FASB proposal, as details are currently available, and noted the need for SEC action to further FASB’s efforts. 
• FACT addressed the Security and Exchange Commission’s Investor Advisory Committee earlier this month highlighting the need for public country-by-country reporting as a means to protect investors. (Read our FACT sheet, “The Case for SEC Action on Public Country by Country Reporting”.)

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