Group Tax Strategy

Taxes play a crucial role in economic development of any country and Majid Al Futtaim (‘the Group’) believes that every business must pay its fair share. As one of the largest UAE headquartered multinational groups having business operations in over 15 countries and over 42,000 employees, the Group recognises the importance of its tax obligations and is committed to comply with the tax laws and related regulations in all the countries that it operates. 

Tax compliance

The Group strives to achieve full tax compliance by making all requisite tax submissions, filings and payments on an accurate and timely manner. The Group aims to undertake all inter-company transactions on an arm’s length basis in line with the Group Transfer Pricing policy.

In order to discharge its responsibilities adequately, the Group employs qualified staff to ensure that its tax policy objectives are met. External reputable tax advisors are engaged where appropriate to assist with tax compliance matters and provide technical support on more complex tax issues. Changes to tax laws and practices are constantly monitored. 

Approach to Tax Governance and Risk Management

The Group seeks to manage its affairs in a way that maximises long term shareholder value through a principled, transparent and prudent approach to tax planning and risk management. This is administered by a Board-approved tax governance framework under which the CFOs (Holding and Operating Companies i.e. OpCos) are responsible for overall management of tax affairs. A team of qualified experienced tax professionals support the CFOs to meet the Group’s tax obligations and manage risks. The Audit and Risk Committee(s) and Board(s) of the Group and OpCos (as relevant) discuss tax matters regularly and provide oversight.

The Group seeks to ensure that taxes are proactively managed in a sustainable manner with a high degree of integrity and manages tax risks and compliance with tax laws through well-defined internal processes and controls. Where a tax risk is identified, the Group’s governance procedures require notification and escalation to the Audit and Risk Committee(s). The subjective nature of several tax provisions, along with the nascency of tax laws and regulations in some of the key jurisdictions in which the Group operates, makes it challenging to fully mitigate all tax risks. 

Tax risk appetite

The Group has no level of acceptance for breaching tax laws intentionally, acting outside of the spirit of such laws or assisting customers or vendors in tax avoidance inappropriately. Any tax planning is supported by genuine commercial activity and there is no appetite for using aggressive tax structures.

The Group does not have prescribed levels of acceptable tax risk. Tax risk is considered on a case by case basis taking into account the relevant facts and circumstances and external professional advice is sought, as required.

Tax Planning

The Group recognises that to drive maximum shareholder value, any unintended tax leakages and/ or inefficiencies must be minimised and any genuine benefits under the governments’ tax policy design must be availed. Accordingly, the Group will utilise tax incentives or opportunities for obtaining tax efficiencies only where the following are present:

• An overall commercial rationale and alignment with business objectives;

• Alignment with the intended tax policy objectives of lawmakers i.e. the spirit as well as letter of the law are respected; and

• Significant risk of reputational damage is not expected.

The Group does not enter into artificial arrangements in order to reduce its tax liability or otherwise employ tax avoidance strategies.

Approach to Dealings with Tax Authorities

The Group seeks to maintain a constructive and transparent relationship with tax authorities by:

• Engaging on consultations and participating actively in discussions relating to upcoming legislation either directly or via industry bodies;

• Disclosing any inadvertent errors in submissions made to the relevant Tax Authorities as soon as reasonably practicable after they are identified;

• Responding to their enquiries during audits and otherwise in a timely manner; and

• Seeking written clarifications, advance rulings or entering into formal agreements in respect of material tax issues, for example through Advance Pricing Agreements.