At Ahold Delhaize, we seek to make a positive impact in the communities where we operate and be a good neighbor. One way we do this is by paying taxes in a way that takes into consideration social and corporate responsibility and the interests of all our stakeholders. Our overall tax approach is in line with Ahold Delhaize’s Business Principles, Healthy and Sustainable strategy and Code of Conduct.
Our tax policy consists of five main tax principles: transparency, accounting and governance, compliance, relationships with authorities and business structure. Our tax principles are aligned with the Responsible Tax Principles, which were developed by a group of leading companies, along with involvement from civil society, investors and representatives from international institutions. The principles are known as the B Team Responsible Tax Principles. In 2017, the B Team brought together the heads of tax from nine multinationals. They developed a new framework for approaching tax with a set of Responsible Tax Principles. The Principles raise the bar on how business approaches tax and transparency and help forge a new consensus around what responsible tax practice looks like.
We are proud of the fact that by paying our share of taxes in the countries where we operate, we contribute to economic and social development in these countries. Also, with our total tax contribution, we support the UN Sustainable Development Goals.
In 2021, Ahold Delhaize collected and paid many types of taxes: payroll tax, corporate income tax, net-value-added tax (VAT), sales and use tax (S&U), property tax and real estate tax, dividend tax, excise and customs duties and others (e.g., packaging tax).
The total tax contribution and corporate income tax payments reported per country are summarized below.
Note that €2.2 billion of the total tax contribution in 2021 is taxes borne.
In 2021, tax payments in Belgium were impacted by a payment to the Belgian tax authorities for an adjustment notice relating to the tax return over 2018. Ahold Delhaize decided that the basis to issue an additional assessment of approximately €380 million is without any merit and, as such, the Company recorded a receivable for the full paid amount. For more information, see Taxes in Note 34 to the consolidated financial statements in our Annual Report 2021.
Our effective income tax rate (ETR) over 2021 was 21.1%. This is our worldwide income tax expense for the financial year 2021, amounting to €591 million, shown as a percentage of the consolidated income before income taxes.
Accounting and governance
Ahold Delhaize has a well-equipped and professional Tax function. This function reports directly to the CFO and has direct access to the Management Board and the Supervisory Board. At least once a year, the function presents a tax update, including the implementation and execution of the tax strategy, to the Audit, Finance and Risk Committee of the Supervisory Board. The global tax policy is approved by the Management Board.
Our tax risk appetite is based on Ahold Delhaize’s overall compliance-related risk appetite, which is very low. We recognize the risk that non-compliance with applicable tax laws and regulations could result in damage to Ahold Delhaize’s reputation or to the relationship with our host countries. For more information, see How we manage risk in our Annual Report 2021.
To assess and control tax risks, we have a Tax Control Framework in place. Tax controls resulting from risk assessment exercises are defined, implemented and tested by various monitoring functions – comprising senior management and the Risk & Controls (second line of defense) and Internal Audit teams – making use of specific Ahold Delhaize tools developed for this purpose. Based on the annual internal audit plan, selected taxes and/or jurisdictions are audited. This results in an audit report rating the design and operating effectiveness of the tax controls.
Each quarter, our brands approve a letter of representation, which includes a confirmation on the accuracy and completeness of our tax position. We have a tax strategy in place that is proactively communicated throughout the company and we organize training for selected brands and jurisdictions, during which the tax policy and its main principles are explained in the form of tax risk workshops.
Ahold Delhaize associates have access to a whistle-blower line for reporting any ethical or compliance concerns related to company practices, including tax matters.
We are also actively involved in the field of tax technology and have drafted a global tax technology strategy and roadmap based on five pillars: insights, data driven, automation, risk management and future proof. We finalized and have various initiatives underway within our direct (e.g., Country by Country Reporting automation, DAC6 and dashboard) as well as indirect (e.g., VAT solution and tax engine) tax disciplines to optimize and upgrade our tax processes. We closely align with broader finance implementations and the IT function assists us with our tax technology projects. The Ahold Delhaize-wide implementation of a new core finance system is an important enabler of our tax technology roadmap.
Our tax compliance is based on the following examples of good tax practices:
Relationships with authorities
Ahold Delhaize engages with tax authorities based on mutual trust, and we seek open and transparent working relationships with them. We provide the tax authorities with any information they require within a reasonable timeframe. This helps both the tax authorities and Ahold Delhaize to foster timely and efficient compliance. In the Netherlands, we concluded a covenant (horizontal monitoring) with the Dutch tax authorities in 2005. In 2021, this is converted into an individual monitoring plan. In Belgium, we have participated in the Co-operative Tax Compliance Program (CTCP) pilot project since 2020.
As a company close to society, we value constructive dialogue on taxes with the governments in the countries where our brands operate and we respond to government consultations on proposed changes to legislation with the aim to achieve sustainable legislation.
We have a physical presence in all jurisdictions and we follow internationally accepted norms and standards (Organisation for Economic Co-operation and Development/Action Plan on Base Erosion and Profit Shifting/European Union). Our tax decision-making process is based on the following examples of good tax practices: