The economic impact of the Group’s activities is wide and varied. The revenues and profits we earn from the development, manufacturing and sale of our products benefit a range of stakeholders. These are delivered through the salaries we pay our employees, payments to our suppliers and business partners, dividends to shareholders and the taxes and community contributions we pay from the profits we earn.
Our operations span across some 40 jurisdictions, in which we fully and transparently comply with our statutory obligations in both the spirit and the letter of the law. Besides corporate income taxes on profits, our Group companies pay: social contributions and social security taxes on wages; withholding taxes on dividends, interest, services as applicable; import duties and luxury consumption taxes upon the importation of our luxury products into the markets; environmental taxes; and a variety of other miscellaneous taxes on assets, revenues, transactions and expenditures. In addition to those taxes borne by the Group, we fulfil our legal duty to collect: value added taxes; sales taxes; other consumption taxes; withholding taxes on dividends to shareholders and payroll taxes on behalf of Governments.
Switzerland is our largest operating base, and a significant proportion of our total tax bill is paid in Switzerland, with other major jurisdictions including France, Korea, Germany, China, Japan and the United States. Import duties and luxury consumption taxes on our products are particularly significant in several markets. Our Total Tax Contribution, made of taxes borne and collected, is described in the Section 3 of the Tax Strategy Paper (see below).
Taxes affect two key measures of our financial performance: net income and cash flow. But first and foremost, it is a matter of compliance and good governance. We believe that the way in which we manage our tax obligations must actively and compliantly contribute to the Group’s strategic aim of growing value for shareholders over the long-term, safeguarding our critical assets, our reputation and the distinct identity of our Maisons. Our overall aim remains to deliver and implement a tax strategy which is proactively and fully compliant, competitive, long-term, sustainable, transparent, aligned with Group corporate objectives, embedded in the daily operations and projected to anticipate the envisaged evolution in the global tax environment, characterised as never before, by complex dynamics of economic, financial and political nature. To ensure the effective implementation of our tax strategy, we adopt and operate a Tax Risk and Process framework, as described in Section 2 of the Tax Strategy paper (see below).
Richemont is committed to conducting its business activities in accordance with accepted principles of good Corporate Governance. Within such framework, Richemont’s Standards of Business Conduct set out the rules and policies to be adhered to throughout the Group. Our approach to tax aligns with that.