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 2019.  In making this paper available, the UK Group is fulfilling its responsibilities under Schedule 19 of the Finance Act 2016.

A significant contribution to local communities

Pernod Ricard is one of the world leaders in the Wine & Spirits industry with a unique portfolio of Premium international brands, among the most comprehensive in the market. As such, the group complies with all laws and regulations in force in each of the countries in which it operates, as well as the applicable international standards.

In 2018, the Group Pernod Ricard’s income tax charge on recurring items (profit from recurring operations and financial result from recurring operations) was €520m.                                                                                            

In addition to corporate income tax, Pernod Ricard pays and collects numerous other taxes and contributions, including sales taxes, customs and excise duties, payroll taxes, property taxes and other local taxes specific to each country, as part of the Group’s economic contribution to the communities in which it operates.  Pernod Ricard’s total contribution is estimated at around €5.9 billion (unaudited data).

Our approach to tax

We apply the following principles in tax matters:

  • Support for operational activity in compliance with applicable regulations;

 

  • Integrity in the conduct of tax matters;

 

  • Tax management that is both pro-active and efficient in order to preserve and maximise the value generated for the Group and its shareholders.

The Group Pernod Ricard has a number of subsidiaries in some 85 countries in which it operates.  Whenever possible, management makes every effort to liquidate any dormant or quasi-dormant subsidiary inherited from past acquisitions.

Pernod Ricard is vigilant as to the operational and commercial reality of its transactions and refuses to take part in any artificial tax arrangements.  The Group will only use tax incentives after taking into account their impact on our brands, our reputation and our corporate social responsibility.

Transfer pricing

Pernod Ricard’s strategy and organisation 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 solutions and ways to activate them. The Market Companies implement this strategy at local level.

Related party transactions are carried out in accordance with the Group’s transfer pricing policy, which is based on the arm’s length principle (i.e. on terms that would have been agreed between independent parties).

An effective organization

The Group Pernod Ricard has team of qualified and well-trained tax specialists working under the supervision of the EVP Finance, IT and Operations.  We have established clear internal control principles on tax matters available to all employees on the intranet.

The tax legislation in the countries where Pernod Ricard operates is complex and can be subject to interpretation.  Pernod Ricard manages these uncertainties with the help of internal and external tax experts.  Tax provisions are measured on the basis of the Group’s best estimate based on information available (in particular that provided by the Group’s legal and tax advisors) and presented regularly 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 of the countries in which the Group operates in order to build honest and sustainable relationships and to be able to resolve potential disputes quickly.

Pernod Ricard respects the obligations of country-by-country reporting.

We also participate in the development of corporate tax policies, transparency initiatives and tax legislation by taking part in public consultations.

 

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