Sika’s Tax Values
Through its tax principles, internal policies, and actions, Sika is committed to be a socially responsible corporate fiscal citizen. Sika pursues a long-term sustainable tax strategy with focus on compliance with national and international tax laws and regulations.
A reasonable tax strategy with active management of tax matters, ensures that Sika pays a fair-share of tax in each of the more than 100 countries where Sika operates. This section outlines the most important aspects of the Sika Group’s tax strategy in relation to compliance and corporate sustainability. ?
Sika’s tax approach is in line with OECD/G20 guidelines and their general objectives. By following a business-oriented approach based on functions, assets, and operating risks when determining processes and transactions, Sika has a market-based outcome. Therefore a fair amount of taxes is paid in each jurisdiction where the company operates. The outcome of the business-oriented approach is always checked for its compliance with all applicable laws.
Furthermore, potential impacts on stakeholders and Sikas’ reputation are taken into account. In line with Sika’s corporate values, the objective of Sika’s tax policy is to comply in good faith with the letter and the spirit of all applicable tax laws and obligations in all countries where the company operates, across all direct and indirect taxes, as a company and employer, as well as with international treaties and guidelines. Such approach results in an effective Group tax rate that reflects Sika’s global footprint, the decentralized nature of the business, and the Group’s successful local operations.
Based on genuine business rationale and with a long-term view of sustainability and predictability, Sika proactively manages, monitors and controls the tax aspects of its business operations and transactions. The company manages its total tax costs for doing business within clear risk parameters in line with the Sika Group business operations and responsible strategies. Sika adheres to the arm’s length principles and complies with local laws and regulations for pricing of intercompany transactions. Sika companies maintain contemporaneous transfer pricing documentation in compliance with local legislation. ?
Sika does not engage in aggressive tax planning and does not use complex structures or offshore havens to minimize its tax liabilities. Sika does not adopt tax schemes based on form without commercial substance. Sika does not use offshore entities that lack business purpose and substance. Sika does not use hybrid instruments and/or entities in structures that result in tax avoidance, double deduction or no taxation. Sika engages external advisors when appropriate to manage tax risks.
Sika promotes open and transparent working relationships with tax authorities. When applicable, Sika uses appropriate mechanisms to clear the tax impact of major transactions with relevant tax authorities in advance. Tax audits are conducted in a supportive and collaborative way and requested information is provided in a timely manner. On certain occasions, Sika may provide technical input to the relevant authorities with respect to proposed tax legislations using the appropriate channels, in an effort to constructively improve the competitiveness of a tax system. ?
Starting in 2016, Sika was one of the first companies to submit an annual Country-by-country Report (CbCR) to the Swiss Federal Tax Administration (SFTA) on a voluntary basis. This OECD/G20 standard includes pertinent information such as profit and taxes paid per country where the company is active. In line with the OECD’s intention, the SFTA passes this report on to the tax authorities in other countries where Sika is subject to taxation (SFTA currently has activated more than 60 CbCR exchange relationships and is one of the most active in promoting transparency). The result of the CbCR demonstrates? that Sika is duly complying with its tax obligations and paying its fair share of tax.
The tax strategy based on sustainable practices, business reality and adhering to national and international tax regulations has ensured Sika a very stable and fair effective tax rate year after year. The application of this strategy has been tested during tax audits where tax authorities typically have accepted our approach. As a result, the total prior tax expense adjustments based on tax audits or changed tax accounting assessments has typically been less than 1% point for the last 10 years. The success of this tax strategy relies mainly on Sika’s commitment to be a socially responsible fiscal citizen, paying our fair share and protecting our shareholders’ interest.