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This week in tax: Amazon to face shareholder GRI vote

Amazon may be about to open up its tax files

This week the Securities and Exchange Commission (SEC) ruled in favour of Amazon shareholders having a vote on whether the company will sign up to the Global Reporting Initiative (GRI).

Amazon will have to hold a vote on whether the technology company will adopt the GRI standard after the SEC ruled in favour of it. Shareholders will have the opportunity to vote at Amazon’s annual general meeting on May 25.

If the company joins the GRI, Amazon would voluntarily adopt a revised global format to tax reporting and public disclosures. It would be a significant step forward for tax transparency given the scale of the technology company.

Institutional investors worth an estimated $3.6 trillion called for the SEC to support a vote on the GRI. Tax professionals told ITR last week that the GRI has advantages for governments and businesses because it has lower compliance costs than country-by-country reporting (CbCR).

“Compliance burdens from CbCR and other comprehensive tax reporting regimes might speed up the transition to a singular source of truth for businesses, so why not the GRI,” said Karl Berlin, vice president and head of tax at Ørsted.

Amazon previously rejected a vote on the GRI standard on the grounds that tax affairs were “ordinary business matters” and subject to a shareholder resolution exemption. The SEC rejected this argument because the GRI “transcends ordinary business matters”.

In other news, EU finance ministers failed to agree on a minimum tax directive at a key summit. Most EU governments signed up to the OECD’s pillar two proposal, yet there is still a deadlock over the details.

The Russian government continues to threaten intellectual property (IP) norms in reaction to international sanctions. However, the seizure of IP brings transfer pricing risks for businesses making tough decisions about their Russian operations.

The French public will be going to the ballot box on April 10 to cast their votes in the first round of the presidential election. President Emmanuel Macron has returned to his pro-business offering of production tax cuts, but he faces a close race against far-right candidate Marine Le Pen.

Meanwhile, the Celltrion case in South Korea has demonstrated just how the Korean tax authority will tackle companies for breaking transfer pricing standards.

Indonesia joins the crypto tax race

The Indonesian government is set to impose a 0.1% capital gains rate on income generated from crypto trading, as well as a 0.1% VAT rate on crypto-asset transactions. The plans have sent the price of Bitcoin into decline in Indonesia, but the plan is not going to come into force until May 1.

Indonesia is just the latest country to target cryptocurrency transactions and other crypto-assets. The crypto market has come under scrutiny over claims of tax evasion and avoidance. However, Indonesia will be imposing a much lower rate of tax on crypto than other countries such as India.

The Indian government has imposed a 30% capital gains rate on income made from crypto trading and investment. Traders and investors in the Indian market will not have the option to offset tax costs if they make a loss.

By contrast, the Indonesian government intends to extend a tax deduction at source (TDS) on crypto transactions. The TDS will be set at 1%. This will allow traders to deduct the tax amount from a seller when buying cryptocurrencies.

Indonesia may be creating a special tax regime just for crypto-assets, but this looks like another form of tax competition. The result may be higher revenue if greater crypto transactions take place in Indonesia rather than countries with higher rates.

However, the crypto industry is still small in Indonesia compared to countries like India. It may take more than a competitive tax regime to expand the industry. This is why Indonesian regulators are working hard to improve the regulatory framework for crypto.

Shell continues to receive UK tax rebates

Energy company Shell received another UK tax rebate for decommissioning the Brent oil and gas field in the North Sea. The platforms will be fully decommissioned by 2024.

Shell began to decommission the Brent oil and gas field platforms in 2017. It is the biggest decommissioning project undertaken by the energy company. The UK government reformed its tax regime to offset tax costs for such closures.

As a result of this regime, Shell received $121 million from the UK Treasury in 2021 and will likely receive more tax rebates before the platforms are fully closed in 2024.

Nevertheless, the oil and gas industry has made vast profits on the back of surging energy prices in 2021. Green campaigners are calling for a windfall tax on the industry to increase investment in sustainable energy.

However, the UK government is resisting calls for a windfall tax. Instead, Chancellor Rishi Sunak has called for energy companies to increase investment. In response, Shell has announced plans to boost investment in wind and hydrogen power.

The gas producer is planning to invest between £20 billion and £25 billion in energy infrastructure over the next 10 years. More than 75% of this investment will go to low-carbon and zero-carbon projects, according to Shell.

The UK government is looking to make the country more energy independent by opening nuclear power plants. Meanwhile, the price of gas continues to rise and many households are struggling with the costs.

Next week in ITR

ITR will be providing an in-depth analysis of the EU’s use of blockchain technology for withholding tax. The hope is that this will enable the seamless transfer of data between different national tax systems.

The UK’s Making Tax Digital (MTD) project has finally been completed, however, MTD for VAT has left taxpayers with a lot of work to improve data quality and to ensure full compliance. Many businesses have not invested enough in their tax systems to meet this goal.

Readers can expect these stories and plenty more next week. Don’t miss out on the key developments. Sign up for a free trial to ITR.

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