L’Oréal considers that taxation is an integral part of its social, environmental and societal responsibility and constitutes away to participate positively to the development of the countries in which the Group operates.
The L’Oréal Group’s tax policy forms part of the sustainable development of its business. It is based on three pillars, which are defined in the Internal Tax Charter prepared and distributed around the world: Compliance, Transparency and Legitimacy.
L’Oréal completes its tax declarations and pays its taxes by the deadlines in compliance with the laws and regulations in the countries in which the Group operates.
Special vigilance is required on compliance with the rules related to the fight against tax fraud and tax avoidance.
In 2022, L'Oréal has strengthened the distribution of roles and responsibilities of tax and accounting functions and their interactions, in order to harmonise the standards and processes that relate to tax compliance by the Group.
L’Oréal is located in countries where it conducts a real operational and commercial activity. If applicable, the Group’s presence in certain so-called “tax haven” countries is justified for operational reasons and the development of its activity, and not for tax purposes.
L’Oréal ensures that transactions between Group companies are carried out in compliance with the arm’s length principle defined by the OECD and the UN and satisfies increasingly digitalised reporting obligations (transfer pricing documentation, country-by-country reporting, etc.).
In view of the OECD reform that provides for a minimum level of taxation of 15% in each country (Pillar 2), L’Oréal is preparing to adapt its information systems in order to comply with this future regulation.
L’Oréal aims for excellence in tax compliance.
L’Oréal establishes and maintains relations with Tax and Customs Authorities based on transparency, pursuant to the Group’s “zero tolerance” rule on corruption.
L’Oréal also develops a constructive relationship with Tax and Customs Authorities, a relationship based on the principles of co-operation and mutual respect. L’Oréal responds appropriately and promptly to requests from the tax authorities regarding the exchange of information, in compliance with tax conventions.
Where permitted to do so by governments, L’Oréal joins the cooperative compliance programmes launched by the tax authorities. For example, the trust relationship (“relation de confiance”) with the French tax authorities.
The Group may contribute to the analysis of legislative changes at the request of Tax and Customs Authorities or professional associations involved. Consequently, the Group takes part in OECD working groups relating to Pillars 1 and 2.
L’Oréal takes into consideration global challenges and standards in terms of tax transparency. In particular, it adheres to the reporting recommendations of the GRI (Global Reporting Initiative) and, more specifically, standards GRI 207-1, GRI 207-2 and GRI 207-3.
L’Oréal is also a member of the European Business Tax Forum (EBTF), a European companies association that seeks to increase transparency in the tax debate.
L’Oréal legitimately applies the most relevant tax treatment, in accordance with the economic reality, operational objectives and the laws in force.
In an evolving international tax environment, the positions taken by the Group may be questioned and subject to tax and customs audits by local authorities. If there is disagreement with a Tax or Customs Authority, L’Oréal is able to legitimately defend its interpretation of the law, prove its good faith and, as needed, bring the disputes to court.
A regular review of tax risks, carried out by the Group’s Tax Department in contact with the local financial teams, enables the risks to be assessed, resulting, if applicable, to the recognition of a provision. The main risks are reported to the General Management and the Audit Committee.
Centralised expertise and a strong geographical presence of the tax function in the Countries ensure compliance with these three pillars.
The Chief Financial Officers are responsible for tax compliance, backed up and relayed by the Tax and Accounting Departments. These Departments monitor changes in tax regulations to ensure that the Group complies with these regulations. They are assisted, where applicable, by external advisors.
Within the Department of Operational Finance, the Group Tax Department ensures compliance with the Tax Policy in collaboration with the Finance Departments, through intermediaries in the form of different group-wide tax experts:
