Target 17.1: Domestic resource mobilization, including tax
Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection
Owners remove an obstacle nothing else removes. Others must also act.
Why shareholder democracy is necessary
UNCTAD estimated in 2015 that multinational profit shifting costs developing countries around 100 billion dollars a year in tax revenue, more than Africa's 93 billion dollar annual infrastructure financing gap. The tax conduct of listed multinationals is therefore a necessary input to domestic resource mobilization. Shareholders have begun voting on it directly. In 2022, proposals for public country-by-country tax reporting won 21 percent of independent votes at Amazon and 27 percent of the vote at Cisco. At Microsoft, they drew backing from investors holding more than 305 billion dollars in shares. Corporate lobbying has blocked transparency rules, as the 2017 congressional repeal of the SEC's extractive payments rule after industry opposition shows. The 100 billion dollar profit-shifting loss is nonetheless a fraction of developing-country revenue needs. Most domestic revenue depends on tax administration capacity, domestic tax bases and international support that owners do not control. Multinational tax conduct and lobbying are a necessary obstacle owners can remove, and governments must act on the rest.
How this was scoredNecessary
Necessary. Owners remove an obstacle nothing else removes. Others must also act.
We have not yet written down the two answers behind this rating. Recording them on every item, so a reader can check the reasoning and not only the conclusion, is work in progress.
Every rating is the higher of two answers, one for what companies do and one for what they spend to stop the outcome, because the same vote reaches both. See the full method.
Sources
- 5 ways to make the taxation of multinationals fairer, UNCTAD, 2015
- Microsoft, Cisco Shareholder Votes Demonstrate Increasing Investor Demand for Tax and Offshore Transparency, FACT Coalition, 2022-12-21
- Extractive Industry Transparency Rule Subject to Long Battle, Poised to Meet a Quick End, Center for Global Development, 2017-02-06
What civil society organizations are helping owners on this
Works with other investors to file shareholder proposals asking US multinationals to disclose their offshore operations and tax practices on a country-by-country basis.
Tracks and publicizes member-filed shareholder proposals for public country-by-country tax reporting and uses the vote results to press the SEC for disclosure rules.
3 campaigns on record
Asked the board to issue a tax transparency report to shareholders, at reasonable expense and excluding confidential information, prepared in consideration of the indicators and guidelines set out in the Global Reporting Initiative's Tax Standard, which requires public country-by-country reporting of revenue, income, employees, cash taxes paid, taxes accrued and tangible assets.
Result: Voted on as Shareholder Proposal 6 at the annual meeting of 13 December 2022 and not approved: 1,188,222,206 votes for, 3,982,547,802 against, 30,776,762 abstaining and 1,205,617,945 broker non-votes, which Microsoft reported as 22.97% support. That was the highest support of the six shareholder proposals on that ballot, the next highest being 20.43%. The FACT Coalition described the same vote as investors representing more than $305 billion backing the proposal.
We found no tax transparency report from Microsoft prepared to the GRI Tax Standard, and no change that any source we opened attributes to this vote.
Asked the board to issue a tax transparency report to shareholders, at reasonable expense and excluding confidential information, prepared in consideration of the indicators and guidelines set out in the Global Reporting Initiative's Tax Standard, which covers revenue, income, employees, cash taxes paid, taxes accrued and tangible assets country by country.
Result: Voted on as Proposal 4 at the annual meeting of 8 December 2022 and not approved: 781,754,210 votes for, 2,120,268,096 against, 31,263,008 abstaining and 462,490,228 broker non-votes. That is 26.9% of the votes cast for and against, the 27 percent the FACT Coalition reported, which it also described as $38.3 billion in shares.
We found no tax transparency report from Cisco prepared to the GRI Tax Standard, and no change that any source we opened attributes to this vote.
Asked the board to issue a tax transparency report to shareholders, at reasonable expense and excluding confidential information, prepared in consideration of the indicators and guidelines set out in the Global Reporting Initiative's Tax Standard, which covers revenues, profit or loss before tax, corporate income tax paid and employee numbers in each jurisdiction.
Result: Voted on as Item 12 at the annual meeting of 25 May 2022 and not approved: 64,702,796 votes for, 305,060,237 against, 3,107,496 abstaining and 53,465,310 broker non-votes, which is 17.5% of the votes cast for and against. The FACT Coalition reported the same vote as more than 21 percent of independent shareholders, representing $144 billion in shares, and said it was the first time a public country-by-country reporting proposal had gone to a vote anywhere.
We found no tax transparency report from Amazon prepared to the GRI Tax Standard, and no change that any source we opened attributes to this vote. Amazon had tried to keep the proposal off the ballot and the Securities and Exchange Commission sided with the shareholders.
Related subjects on other maps
How this rating was made
Every item on every one of our maps is read against one question: how far does this depend on the people who own companies voting their values? We answer it twice, once for what companies do and once for what they spend to stop the outcome, and take whichever answer is higher, since the same vote reaches both. The score carries its reasoning and its sources so that a reader can check it rather than take it.
- Pivotal. Owners voting their values can deliver most of the outcome.
- Necessary. Owners remove an obstacle nothing else removes, and others must also act.
- Helpful. Owners voting their values help, and others carry most of it.
- Independent. This moves without owners. Other levers carry it.
The advocacy record on this page holds only what a source we opened says happened. Where we searched and found nothing, the page says so rather than leaving a silence. Where a campaign names a filer the source does not name, it says that too. Ratings are ours; the list of subjects is UN Sustainable Development Goals's, and we link to their original.
How we score dependency, in full.