PERNOD RICARD GROUP TAX POLICY

 

This paper sets out the global tax policy of the Pernod Ricard Group and applies to all qualifying UK group entities for the financial year ending 30 June 2018.  In making this paper available, the UK Group is fulfilling its responsibilities under Schedule 19 of the Finance Act 2016.

A significant contribution to the local communities

As one of the global leaders of the Wine & Spirits industry with a unique portfolio of premium international brands, one of broadest of the industry, Pernod Ricard is committed to observing all applicable laws, rules and regulations in every jurisdiction where the business operates and complying with relevant international standards.

In 2017, the Pernod Ricard Group’s Income tax charge on recurring items (business profit and financial result) was €509m.                                                                                                       

In addition to corporate income tax, Pernod Ricard pays and collects numerous other taxes, including sales taxes, excise taxes and customs duties, employment taxes, property taxes and other local taxes specific to each jurisdiction as part of the Group’s economic contribution to the communities in which we operate.  The total tax contribution of Pernod Ricard is estimated to around € 5.8 billion (data non-audited).

Our approach to tax

We seek to ensure that our approach to tax is aligned with the Group’s business and strategy.  

Our tax principles are as follow:

  • Operate in compliance with the rules and regulations with the aim of supporting the business

 

  • Act with integrity in all tax matters

 

  • Manage tax in a pro-active and efficient manner to protect and maximise value for the business and shareholders

The Pernod Ricard Group has a significant number of subsidiaries in more than 85 countries in which it carries out business.  Management is making every effort to close, where possible, any dormant or near dormant affiliates inherited through acquisitions.

Pernod Ricard is also committed to ensuring business and commercial substance and will not engage in artificial tax arrangements.  Incentives which are made available by governments may be used only after having considered the impact on our brands, reputation and corporate and social responsibilities.

 

 

Transfer pricing

Pernod Ricard’s strategy and organization is built on a decentralised model with an ongoing

relationship between the Brands Companies and the Market Companies.  The Brand Companies generally own, protect and develop the intellectual property. They are also in charge of developing the overall strategy for the brands as well as activating solutions and assets. The Market Companies implement that strategy at local level.

 

The related party transactions are carried out in line with the Group’s transfer pricing policy based on the arm’s length principle (i.e. at the condition that would have been agreed between independent parties).

An effective organization

Pernod Ricard Group relies on a qualified and trained tax team, under the managerial responsibility of the Group Managing Director in charge of Finance and Operations.  We have established clear internal control principles on tax matters available to all employees on the internal website platform.

The tax legislation in the countries where Pernod Ricard operates is complex and can be subject to interpretation.  Pernod Ricard manages this uncertainty by working with internal and external tax experts.  Tax provisions are assessed on the basis of the Group’s best estimate based on information available (especially information provided by the Group’s legal advisors), regularly presented to the Audit Committee. 

International transparency promotion

Pernod Ricard is committed to being open and transparent with tax authorities and to disclosing relevant information to enable them to carry out their work.  Pernod Ricard places particular importance on working positively, proactively and transparently with tax authorities in jurisdictions that we operate in to build positive, honest and long term relationships and where disputes occur, to address them promptly.

Pernod Ricard will comply with the country by country reporting requirement by disclosing it to the French Tax Administration before June 30, 2018.

We also contribute to the development of business taxation policies, transparency initiatives and legislation by participating in public consultations or policy debates.

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