Compliance to the code Ahold Delhaize
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Responsible Tax
At Ahold Delhaize, we seek to make a positive impact in the communities where we operate and be good neighbors. 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 (that applies to all consolidated group entities) consists of five main tax principles: transparency, accounting and governance, compliance, relationships with authorities and business structure. Our tax principles are aligned with The B Team’s Responsible Tax Principles, developed by a group of leading companies, with involvement from civil society, investors and representatives from international institutions. In 2017, The B Team brought together the heads of Tax from nine multinationals to develop the Responsible Tax Principles, which raise the bar on how businesses approach tax and transparency and help forge a new consensus around what responsible tax practice looks like.
Ahold Delhaize embraces the principles included in the VNO-NCW Tax Governance Code and signed the Code, together with more than 40 large Dutch internationally operating companies, in May 2022.
For further reference to how Ahold Delhaize complies with the Tax Governance code reference is made to the below document.
Transparency
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 2022, Ahold Delhaize collected and borne many types of taxes: payroll tax, corporate income tax, net-value-added tax (VAT), sales and use (S&U) tax, property tax and real estate tax, dividend tax, excise and customs duties and others (e.g., packaging tax), for a total amount of €6 billion. Note that €1.8 billion of the total tax contribution in 2022 is taxes borne.
The total tax contribution, corporate income tax payments and corporate income tax accrued reported per country are summarized below.
Our effective income tax rate (ETR) over 2022 was 22.2%. This is our worldwide income tax expense for the financial year 2022, amounting to €714 million, shown as a percentage of the consolidated income before income taxes.
Tax incentives
We define tax incentives as fiscal measures designed by governments to stimulate investment and encourage growth, or a change in behaviour, by providing more favourable tax treatment to some activities or sectors.
At Ahold Delhaize we seek to make a positive impact in the communities where we operate. For some activities with a positive impact to the communities, as described below, there are also tax incentives available.
Ahold Delhaize does make limited use of tax incentives. The main material tax incentives applied by Ahold Delhaize in the various jurisdictions where we operate are:
Wage tax credits
By giving an opportunity to employees who normally face difficulties finding employment certain wage tax credits are available locally. The local governments wishes to stimulate work participation in the labour market for persons with difficulties to find employment. For example due to physical disabilities..
Capital investment credits
Some local governments wish to stimulate investments (e.g. warehouses or stores) in certain areas to stimulate the growth of the economy in the local communities. One way this is realized is by providing capital investment credits.
Research & Development (R&D) incentives
Some R&D activities are stimulated by local governments to increase the level of innovation and subsequently the growth of the economy. We try to be innovative wherever we can, for instance in the optimalization of stock in our warehouses as well as in our stores. For some of these innovative activities, we receive R&D incentives.
Accounting and governance
Ahold Delhaize has a well-equipped and professional Tax function. It 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.
Tax in control statement:
Being in control in relation to taxes and responsible taxation is an important objective for the Tax department and the broader group. Activities supporting this are:
- We have a tax control framework in place to assess and control tax risks for the various taxes and jurisdictions.
- Tax controls resulting from risk assessment exercises are defined, implemented and tested by various monitoring functions – comprising senior management, 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.
- A separate control framework for responsible taxation is in place.
- (Local) management signs a letter of representation on a quarterly basis stating, among others, that they are in compliance with all (tax) controls and policies.
- Frequent update meetings with local CFOs and business teams.
- A tax compliance report.
- Permanent education of the Tax team and related functions.
Each quarter, our brands sign a letter of representation, which includes an approval and 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 through tax risk workshops.
On a regular basis, we monitor that the tax strategy is aligned with the Ahold Delhaize Business Principles, Healthy and Sustainable strategy and the Code of Conduct. For example, the Tax department’s annual objectives are based on the abovementioned principles and strategy and cascaded to individual associates’ goals. Department and associate performance compared to these objectives is measured at least once per year.
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. We have drafted a global tax technology strategy and roadmap based on five pillars: insights, data driven, automation, risk management and future proof. Various initiatives were set-up within our direct tax disciplines (e.g., Country by Country Reporting automation, DAC6, Pillar 2 calculations and dashboard) and indirect tax disciplines (e.g., VAT solution and tax engine), to optimize and upgrade our tax processes. We closely align with broader finance implementations and our 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.
Compliance
Our tax compliance is based on the following examples of good tax practices:
- We aim to file our taxes in full compliance with local laws and regulations.
- We base our tax compliance on a reasonable and responsible interpretation of tax laws.
- We aim to comply with the letter as well as the spirit of the law.
- We attempt to discuss and clarify uncertainties about the tax treatment upfront with the tax authorities.
- We only seek rulings from tax authorities to confirm the applicable treatment of laws and regulations based on full disclosure of the relevant facts.
- We only make use of tax incentives when they are aligned with our business and operational objectives, follow from the tax law and are generally available to all market participants.
Relationships with tax 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 have an individual monitoring plan in place with the Dutch tax authorities. In Belgium, we have participated in the Co-operative Tax Compliance Program (CTCP) pilot project since 2020.
Stakeholder engagement
As a company close to society, we value constructive dialogue on taxes with the governments in the countries where we operate and we respond to government consultations on proposed changes to legislation with the aim to achieve sustainable legislation.
In addition to the tax authorities, our stakeholders also include investors, customers, business partners, non-governmental organizations, employees and the broader communities in which we operate. We are an active member in a number of stakeholder representation groups such as the VNO-NCW (tax group) and Nederlandse Orde van Belastingadviseurs. We also participate and provide active feedback in the VBDO tax transparency initiative and the DJSI sustainability initiative. We actively participate in the EBTF Total Tax Contribution Study.
Business structure
We have a physical presence in all jurisdictions where we operate 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).
In anticipation of new EU and OECD regulations (e.g., Pillar 2), we will cease operations in Curacao in 2023. We do not expect material changes for any of our other operations with respect to Pillar 2 implementation.
Our tax decision-making process is based on the following examples of good tax practices:
- We do not transfer value created to jurisdictions listed on the EU "blacklist” of non-cooperative jurisdictions for tax purposes updated by the Council of the European Union on February 14, 2023, or (low-tax) jurisdictions listed on the Netherlands’ blacklist published in the Government Gazette on December 27, 2022.
- We pay tax on profits according to where value is created within the normal course of business.
- We base our transfer pricing policy on the arm’s length principle.
- We do not use opaque corporate structures or those situated in low-tax jurisdictions to hide relevant information from the tax authorities.
- We do not operate in countries listed in low-tax jurisdictions.
- We are transparent about the entities we own (see Note 35 to the consolidated financial statements).
- We will not engage in arrangements, with any employee, customer or contractor whose sole purpose is to create a tax benefit in excess of what is reasonably understood to be intended by relevant tax rules.