Appendix 10: Tax & Financial Reporting Issues Carrefour Must consider as they Pursue their Global Expansion Strategy

Carrefour's International Tax Liabilities

Labour Tax

'Other' Taxes

Carrefour's Accounting/Financial Department

Transfer Pricing

BEPS

Dividends

Capital Gains

Property Transfer

Financial Transactions

Property

Waste Collection

Vehicle/Road

Small taxes/fees

Transfer Mispricing

Different tax rates per country - Brazil, China, Spain, France, Romania, Taiwan, Argentina & UAE 🚩

Profit/Corporate Income Tax

Must understand different jurisdictional rules

Different reporting times

Tax loophole - a legal practice

Greater public scrutiny - government bodies, media & consumers

Ethically questionable

Potential brand damage 🚩

This technique would save Carrefour money - see implications above ✅ ⛔

Standard legal practice

Accurately recording sales between Carrefour and its subsidiaries

Illegal 🚩

Considered a form of tax evasion

Considered a tax avoidance technique

Carrefour's Ethical Position

OECD's BEPS Project

New international tax reporting

Country-by-country reports

Master files

Local files

New OECD's BEPS Project Implications

Note 4: 'Transfer mispricing’ = artificially distorting sale prices between internal subsidiaries (Tax Justice Network, 2017).

Note 4

Note 2: 'Base Erosion and Profit Shifting' (BEPS) = Tax loophole exploited and profits artificially shifted to lower/zero tax locations (Tax Justice Network, 2017).

Note 2

Note 3: 'Transfer pricing' = Agreeing a price for a transaction between 2 groups from same company (Tax Justice Network, 2017).

'Arms length' approach?

Note 3

Note 1: 'OECD' = Organisation for Economic Co-operation and Development. Produced 2015 15 BEPS ‘Action’ Plan to help stop tax avoidance (Oliver, 2017)

Note 1

CEO led messaging - strict financial discipline

Pressure from CEO?