As part of our promise to be a better neighbor, Ahold Delhaize seeks to make a positive impact in the communities in which we operate. One way we do this is to pay taxes. In this respect we take into consideration social and corporate responsibility and the interest of all our stakeholders. Our overall tax approach is in line with Ahold Delhaize’s business principles and code of conduct.
Our tax policy consists of six elements: tax control framework and oversight; relationships with tax authorities; government relations; compliance with tax regulations; tax in the Annual Report; and good tax practices.
Tax Control Framework and Oversight
To assess and control tax risks, we have a “Tax Control Framework” in place. The Ahold Delhaize Internal Audit function reviews the effectiveness of this framework on a regular basis.
Ahold Delhaize has a well-equipped and professional tax function. This function reports to Ahold Delhaize’s CFO and has direct access to the Management Board and the Supervisory Board. At least once a year, a tax update is presented by Ahold Delhaize Tax to the Audit, Finance and Risk Committee of the Supervisory Board.
Our tax risk appetite is based on the overall Ahold Delhaize risk appetite. We recognize the risk that non-compliance with applicable tax laws and regulations could result in damage to Ahold Delhaize’s reputation or damage to the relationship with the host countries. Further, we recognize that not contributing our share in taxes could impact the economic development of these countries due to reduced tax receipts. We further refer to the “How we manage risk” section in the Annual Report 2018.
Tax controls resulting from risk assessment exercises are defined, implemented and tested by various monitoring functions – comprising senior management and the Risk & Compliance and Internal Audit teams – making use of specific Ahold Delhaize tools for this purpose. Each quarter, our brands approve a letter of representation, including taxes. Further, we have a tax strategy in place that is proactively communicated throughout the company.
A whistle-blower line is in place for Ahold Delhaize associates to report any ethical or compliance concerns related to company practices, including tax matters.
We additionally are actively involved in the field of tax technology and are developing a global tax technology strategy. We currently have various initiatives to optimize and upgrade our tax processes.
Relationships with Tax Authorities
Ahold Delhaize engages with tax authorities based on mutual trust, and we seek open and transparent working relationships with them. This helps both the tax authorities and Ahold Delhaize ensure timely and efficient compliance. In the U.S., we participate in the IRS Compliance Assurance Program/CAP and in the Netherlands we concluded a covenant (horizontal monitoring) with the Dutch tax authorities. The annual objectives for Ahold Delhaize’s tax department are shared with the Dutch tax authorities.
As a company close to society, we value constructive dialogue regarding many aspects of taxation with the government in the countries where we operate and respond to government consultations on proposed changes to legislation, with the aim to achieve sustainable legislation.
Compliance with Tax Regulations
We aim to file our taxes in full compliance with local laws and regulations. Our tax compliance is based on a reasonable and responsible explanation of tax laws. We attempt to discuss and clarify uncertainties about the tax treatment up-front with the tax authorities.
Tax in the Annual Report
The Ahold Delhaize consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS).
We believe and are proud of, that by paying our share in taxes in the countries we operate in we contribute to the economic development in those countries. In 2018, of our income before income tax of €2,149 million, we paid €280 million of corporate income tax, including €25 million in the U.S., €175 million in the Netherlands, €28 million in Belgium and €21 million in Greece. Corporate income tax paid in the US is affected by US tax reform.
Our effective corporate income tax rate (ETR) over the past year was 17.3%. This 2018 ETR is impacted by the one-time recalculation of Ahold Delhaize’s deferred tax positions, applying the reduced Dutch, Greece and Belgium statutory corporate income tax rates. The ETR for 2018, excluding the impact of the deferred tax rate changes due to local tax reforms, would have been 18.4%. For a further explanation of the ETR reference is made to Note 10 in the Annual Report 2018.
In addition, Ahold Delhaize collected and paid many other local taxes, including net-value added tax, payroll tax and social security premiums, property tax, sales and use tax, real estate tax, packaging tax, excise tax and customs duties. The total amount of these taxes exceeds €3 billion.
Good Tax Practices
Our tax decision-making process is based on the following examples of good tax practices:
- We do not use opaque corporate structures or those situated in tax havens to hide relevant information from the tax authorities.
- We provide the tax authorities with the information they require within a reasonable timeframe.
- Our transfer pricing policy is based on the arm’s length principle.
We do not have businesses in countries listed on the European Union list of non-cooperative jurisdictions for tax purposes (the EU “blacklist”) published by the Council of the European Union on December 5, 2017 (and last updated on December 4, 2018). Neither do we have business in countries listed on the Netherlands “blacklist” published in the Government Gazette on December 28, 2018.