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 2021.  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

The Group commits to comply with all laws and regulations in force in each of the countries in which it operates, as well as the applicable international standards.

In 2020, Pernod Ricard’s income tax charge on recurring items (profit from recurring operations and financial result from recurring operations) was €468m.                                                                                             

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 €5.5 billion (unaudited data).

Our approach to tax

The Group applies 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.

Pernod Ricard has several subsidiaries in some 73 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 considering their impact on its brands, reputation and Sustainability and Responsibility.  The Group does not promote any form of tax evasion.

 

Transfer pricing

Pernod Ricard’s strategy and organisation are built on a decentralised model with an ongoing

relationship between the Brand 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 efficient organization

Pernod Ricard has a team of qualified and well-trained tax and customs specialists working under the supervision of the EVP Finance, IT and Operations.  Clear internal control principles on tax matters have been defined and made available to all employees on the Intranet.  Processes have been put in place to prevent risks of tax evasion. 

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 based on the Group’s best estimate based on the information available (in particular that provided by the Group’s legal and tax advisors) and presented regularly to the Audit Committee.

 

Promotion of international transparency

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 the 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.

The Group also participates in the development of corporate tax policies, tax transparency initiatives and tax legislation by taking part in public consultations.

 

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