Approach to Tax
As a responsible global corporate tax citizen, our approach to tax is commitment to comply with the tax laws and obligations in all the jurisdictions where Jubilant Group operates and has business presence, in a responsible manner towards meeting all Tax reporting, filing, payment and disclosure requirements aligning with the arm’s length principles of economic value creation and commercial rationale of setting up business presence and simultaneously having an transparent and constructive relationship with tax administrations across the globe.
We understand our responsibility to pay an appropriate amount of tax. Jubilant is committed to pursue a competitive tax strategy in a responsible manner. This means paying tax in jurisdictions where business activity generates profits. As a general rule, the Company and its subsidiaries pay corporate taxes in the countries in which they operate. Competitive tax strategy implies achieving a tax level around the peer-group average. It means having a balanced tax risk profile and not engaging in tax-avoidance activities. We have a substantial business and employment presence in many countries around the globe and we pay a significant amount of tax, including corporation and other business taxes, as well as tax associated with our employees. Significant judgement and estimates are required in determining the worldwide accrual for income taxes, deferred income tax assets and liabilities and provision for uncertain tax positions. At the same time, we have a responsibility to our shareholders to be financially efficient and deliver a sustainable tax rate. As part of this approach, we look to align our investment strategies to those countries where we already have substantial economic activity, and where government policies promote tax regimes which are attractive to business investment.
As we operate throughout the world, there are transactions between and amongst Jubilant Pharmova Ltd. and its Group companies. In line with internationally recognized standards for cross border transactions and OECD (Organisation for Economic Co-operation and Development) guidelines, we base our transfer pricing policy on the arm’s length principle and support our transfer prices with economic analysis and reports. The pricing is driven by the activities undertaken and the value created. This approach is consistently followed in all countries where we operate. Due professional care and judgement is exercised and all decisions are backed by appropriate documentation, while complying with the tax laws of various jurisdictions where we operate.
For jurisdiction specific tax details and details about our subsidiaries, please refer to our Annual report available on the Company website.
Tax Governance, Control and Risk Management
We have robust internal policies, processes, training and compliance programmes to ensure we have alignment across our business and meet our tax obligations. We understand the importance of tax in the wider context of business decisions and have processes in place to ensure that tax is considered as part of the decision-making process.
We are conscious of the negative publicity that can arise from an inappropriate tax policy, and perceive strong internal controls and good relationship with professional advisors and regulators as the best way to manage reputational risk. We engage advisors and legal counsels to review tax legislation and the implications for our business. Where relevant we are active in providing relevant business input to tax policy makers.
We maintain and operate our tax affairs within a strong Tax Governance, Reporting & Control Framework, Policies and Guidelines reviewed and approved by the Group Chief Financial Officer and the Board. Our thrust on transparency drives us to make all the reporting and disclosures relating to tax matters before appropriate forums in a timely manner. The complexity of tax laws and the periodic amendments in global tax arena requires us to keep our knowledge updated in the relevant areas of taxation. In addition to international tax law and regulatory changes such as BEPS (Base Erosion and Profit Shifting) initiatives by OECD, changes in tax frameworks, tax reforms and other changes to the way existing tax laws are applied in jurisdictions and major countries where Jubilant and its subsidiaries and affiliates operate could affect our income, our effective tax rate, and consequently our future net income. These changes may cover matters such as taxable income, tax rates, indirect taxation, transfer pricing, dividend taxation, or a restriction in certain forms of tax relief. Any of these changes could have a material adverse effect on our business and future results. Additionally, due to the complexity of the fiscal environment, the ultimate resolution of any tax matter may result in payments higher or lower than amounts accrued.
Jubilant’s commitment to manage tax risk is integrated with our broader business risk management and compliance framework. Our approach is to manage tax risks and tax costs in a manner consistent with applicable regulatory requirements and with shareholders’ best long-term interests, taking into account operational and economic factors.
The roles and responsibilities of Tax Function is appropriately defined amongst an experienced in-house team of tax professionals responsible for diligently managing tax affairs of the Group. Matters involving significant tax exposures are reviewed closely with senior management of the Group.
Stakeholder engagement and management of concerns related to tax
We are committed to prompt disclosure and transparency in all tax matters with respective tax authorities. Our business is conducted in various countries throughout the world and is subject to tax in such jurisdictions. We pay the taxes as applicable on the income earned in the respective country in a timely manner by filing relevant returns and documents. A significant number of tax returns that are filed are subject to examination by various Federal, state and local tax authorities. We welcome constructive debate on taxation policy.