Taxation

Our 10 Tax Management Principles

1. In line with The Nestlé Corporate Business Principles, our tax policy and objective are to comply in good faith with the letter and the spirit of all applicable tax laws and obligations in all countries where we operate, across all direct and indirect taxes, as a company and employer, as well as with international treaties and international tax guidelines (OECD).

   • As our Group operates and pays taxes in more than 130 countries with very different and fast-changing tax legislations and interpretations, we monitor, adjust and improve our tax compliance.
   • We identify, disclose and fix proactively any compliance gap or error that could happen, or adjustments that could arise upon tax audits and settlements.

2. We recognize that all taxes that we pay and collect for governments are an integral element of our corporate social responsibility and therefore of Nestlé’s Creating Shared Value. We publicly disclose:

   • Our Group Effective Tax Rate.
   • Our total tax contributions at Group and Zone levels and between developed and emerging countries.
   • Our main tax exposures and tax audits.

   We pay the right amount of taxes in the right country.

3. We do not pay taxes that are not legally due or that are claimed based on unprincipled or unjustified basis.

4. We pay our taxes locally, in the countries where our organizations and operations are located:

   • Where our actual economic and business activities take place;
   • Where the business value is created; and
   • In accordance with the way we actually operate our businesses.

5. We take tax positions that are defendable under full disclosure.

   • We do not engage in tax evasion, artificial or high-risk transactions.
   • We do not adopt tax schemes, based on form without commercial substance.
   • We do not use offshore entities that lack business purpose and substance.
   • We do not use hybrid instruments and entities that result in tax avoidance, double deduction or double no taxation.

6. We engage in open and respectful dialogue, cooperation and transparency with tax authorities, whenever possible and reciprocal.

   • We use appropriate mechanisms to clear in advance the tax impact of major transactions with relevant tax authorities.
   • When appropriate, we may engage constructively in expressing our views on the formulation of tax legislation and regulations.

   We defend ourselves and take all actions available, whenever we have a strong business and tax position.

7. We seek to anticipate and resolve disputes without recourse to courts wherever possible. We protect the reputation of the company.

8. We consider the interests of key stakeholders, such as shareholders, employees, consumers, customers, authorities and the communities where we operate.

9. We develop and improve the efficiency of our Tax Organization:

   • In terms of adequate personnel, resources, up-to-date expertise, training and systems; and
   • By developing tax awareness across Nestlé functions and businesses.

10. We maintain and operate our tax affairs:

    • Within a strong Tax Governance, Reporting & Control Framework, Policies and Guidelines; and
    • In accordance with the Group Tax Strategy agreed by the Group Chief Financial Officer and the Executive Board, as well as with the Board and its Committees as applicable.

Nestlé is participating to the B-Team work in order to promote Responsible Tax Principles. The B-Team is a collective of business and civil society leaders working to create new norms of corporate leadership. Here is the link to the B-Team Responsible Tax Principles.

Foundations of our strategy

1. We have a fiduciary duty vis-à-vis our shareholders to manage and plan our total tax costs of doing business in a responsible and sustainable way:

   • In compliance with laws, The Nestlé Corporate Business Principles and the above Tax Management Principles; and
   • Taking into account potential impacts on stakeholders and on our reputation.

2. Our Tax Organization, as a business partner function within Finance & Control, aims to create and protect shareholders’ value and minimize tax risks through proactive tax management of our business operations and transactions, together with the business management and other functions:

   • Value creation is about managing responsibly and sustainably our total tax costs of doing business within clear risk parameters and in line with the Group business operations and strategies.
   • It is not about ‘tax minimization’ or ‘tax optimization’ for the sake of it.
   • We do not have any performance objective (KPI) based on effective tax rates or tax payments.

3. We do responsible and sustainable, business-driven tax planning.

   • Analyzing and managing the tax impacts of current and future business operations and transactions.
   • Based on genuine business rationale and with a long-term view of sustainability and predictability.
   • In the areas of the Group’s business models, its supply and value chains, its structure, its organizations, its assets, its investments and its financing.
   • By claiming tax benefits, incentives and low tax rates available under applicable laws, as long as they are justified legally and from an economic business standpoint.

4. Our Transfer Pricing Policy aims to reflect adequately the allocation of profits among countries and our subsidiaries.

   • Based on their economic and value contribution (functions, decision making, assets, risks).
   • Under market conditions, in line with the ‘arms’ length’ principle and in compliance with local and international laws, including the new OECD ‘Base Erosion & Profit Shifting’ Action Reports.
   • In a consistent and symmetric way across areas, activities and countries, while recognizing differences in transfer pricing legislation and requirements in some countries and differences in business situations, if any.
   • That we disclose and explain under all applicable transfer pricing documentation requirements, including the OECD ‘Master File’ and ‘Local Files’, as well as the ‘Country-by-Country Reporting’, that we provide to all qualifying countries through the Swiss Tax Administration.
   • While recognizing that the Nestlé Group is predominantly decentralized in terms of its structure, organization and operations, yet with globally and regionally managed businesses and functions located in Switzerland and other countries.