Denmark’s AkademikerPension has blasted Microsoft for turning a “deaf ear to shareholders’ demands for tax transparency” as it led a shareholder proposal at the technology giant’s shareholder meeting.

Microsoft has faced criticism for aggressive tax planning to avoid paying taxes on very large profits. In October this year, USA’s Internal Revenue Service (IRS) said Microsoft owes USD 28.9bn in back taxes for the period 2004 to 2013, plus penalties and interest. However, Microsoft disputes this and is pursuing an appeal with the IRS.

AkademikerPension, along with other investors such as Nordea, PenSam, the American OIP Investment Trust, Greater Manchester Pension Fund and Merseyside Pension Fund, requested that Microsoft’s board of directors issue a tax transparency report to shareholders for each country it operates in, which follows the guidelines set out by the Global Reporting Initiative’s (GRI) Tax Standard.

"Microsoft has turned a deaf ear to shareholders' demands for tax transparency for far too long. As an investor, we need transparency and order to ensure the best investment for our members,” AkademikerPension director, Jens Munch Holst, said.

"We call on Microsoft to take the lead and demonstrate transparency by preparing public country-by-country reports on the company's tax payments. If Microsoft does not change course and embrace the GRI standards for tax reporting, the company will risk further scrutiny from tax authorities and further undermining of the company's brand”.

AkademikerPension said it focuses on large companies, such as Microsoft because it believes its tax practices could pose a risk to investors and cause societal problems.

“Governments around the world are in dire need of cash to try to tackle the many crises facing our society. This increases the pressure on companies with creative tax measures and makes them a riskier investment,” Munch Holst added.

It is estimated that countries around the world alone miss out on billions of dollars every year due to companies' profits being moved to other countries with a much lower tax rate.

However, during the annual shareholder meeting, which was held on 7 December, the proposal was rejected. The proposal saw just 21.25 per cent of shareholders vote in its favour.

Microsoft, which recommended a vote against the proposal, stated: "The tax transparency report the proposal requests is unnecessary because we provide abundant disclosure about our tax situation in multiple jurisdictions through existing frameworks. In addition, we support broad-based international tax reform and policies that foster economic growth, investment, and job creation.

"We comply with the tax laws in every jurisdiction in which we operate. As provided in its charter, the Audit Committee of the Microsoft Board of Directors oversees our tax strategy and compliance, reviewing with management the Company’s tax-related policies and processes. This includes regular reports on tax compliance, tax reform initiatives, and other developments in the U.S. and worldwide."

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