Executive Summary

For the fifth consecutive year, we are proud to present the Tax Transparency Benchmark. Five years ago, this benchmark started as a joint project between Oikos and VBDO in response to the turmoil on account of the tax behaviour of several companies and the resulting negative impact on the reputation of these companies. The Tax Transparency Benchmark was born out of an attempt to create a common language on good tax governance and create more understanding between internationally operating companies, tax administrations, advisors and the public.

The first benchmark introduced a guideline on what we believe good tax governance ought to be, with six defining principles. Five years on, we still use these same principles in order to measure the tax transparent behaviour of companies. The aim of this benchmark is to enhance companies’ understanding of corporate tax responsibility and encourage them to communicate comprehensively on tax matters in publicly available information. In this report, we present the results of the 2019 benchmarking exercise, in which 77 Dutch companies are ranked according to the level of tax transparency and good tax governance that they demonstrate.

Ranking Company name Score 2019 Score 2018

1

NN Group

30

21

2

Wessanen

28

21

3-9

DSM

26

21

3-9

ING Group

26

20

3-9

KPN

26

20

3-9

Rabobank

26

19

3-9

RELX Group

26

19

3-9

Unilever

26

23

3-9

Vopak

26

20

10

a.s.r.

25

18

11-13

Aegon

24

23

11-13

AMG

24

23

11-13

Randstad

24

13

14-16

PostNL

23

17

14-16

Shell

23

17

14-16

Van Lanschot Kempen

23

22

17-19

Ahold Delhaize

22

18

17-19

Eurocommercial Properties

22

2

17-19

Heineken

22

17

20

VolkerWessels

21

4

21-25

ABN AMRO

20

16

21-25

Grandvision

20

17

21-25

Kendrion

20

16

21-25

Ordina

20

17

21-25

Vastned

20

20

26-28

Intertrust

19

2

26-28

Nedap

19

19

26-28

Signify

19

14

29-31

Arcadis

18

16

29-31

Fugro

18

16

29-31

BAM Group

18

15

32-37

Brunel

17

16

32-37

Flow Traders

17

15

32-37

ForFarmers

17

9

32-37

TKH Group

17

14

32-37

Unibail-Rodamco-Westfield

17

14

32-37

Wereldhave

17

16

38-42

Aperam

16

11

38-42

ASML

16

16

38-42

BinckBank

16

16

38-42

Heijmans

16

9

38-42

Boskalis

16

13

43-46

Achmea

15

13

43-46

NIBC

15

-

43-46

Philips

15

13

43-46

Wolters Kluwer

15

15

47

Basic-Fit

14

4

48-49

Aalberts

13

12

48-49

Corbion

13

10

50-52

AkzoNobel

12

8

50-52

IMCD

12

14

50-52

TomTom

12

11

53

Takeaway.com

11

12

54-58

Air France-KLM

9

5

54-58

ArcelorMittal

9

8

54-58

ASM International

9

9

54-58

SBM Offshore

9

9

54-58

Sligro

9

9

59-60

Amsterdam Commodities

8

5

59-60

BE Semiconductor Industries

8

7

61-63

Adyen

7

-

61-63

B&S

7

-

61-63

KAS BANK

7

9

64-67

Altice

6

7

64-67

Lucas Bols

6

4

64-67

NSI

6

6

64-67

Pharming Group

6

3

68-70

Accell Group

5

5

68-70

Kiadis Pharma

5

4

68-70

Sif Holding

5

5

71-72

OCI

4

5

71-72

WDP

4

2

73

Fagron

3

1

74-76

Alfen

1

-

74-76

Galapagos

1

2

74-76

ICT Group

1

2

77

Accsys Technologies

0

-

Award

NN Group is the highest scoring company in the Tax Transparency Benchmark 2019 and after consultation with an expert jury, it was chosen as the Winner of the Tax Transparency Award 2019. NN Group scored above average on all good tax governance principles. The company was able to demonstrate that it proactively seeks to act in a responsible and transparent way regarding its taxation. The jury complimented NN Group on its extensive tax strategy, which includes a Tax Control Framework containing a detailed description of how the implementation and execution of the tax strategy is monitored, as well as a description on why tax is an integral part of its business principles. NN Group also provided a risk analysis and key control objectives. Finally, NN Group published a total tax contribution report which features country-by-country data and further information on FTEs, total assets, result before tax and taxation. There were no controversies found by the jury regarding the tax behaviour of NN Group. In summary, NN Group transparently reports on all good tax principles as identified by VBDO and Oikos.

The overall jury verdict on this lustrum edition is that over these past five years, impressive results and progress have been achieved by companies with respect to providing improved transparency and information on such a complex and controversial topic as tax. At the same time, the jury wishes to emphasise that there remains considerable room for improvement, especially in the areas of country-by-country reporting and the provision of tax assurance. According to the jury, companies, auditors and legislators should pay particular attention to this conclusion.

We are delighted that the results of this year’s benchmark clearly show that today companies are more fiscally transparent than ever before in online and publicly available information. Since we started our research, the average transparency rating based on the total points obtained by companies on our six principles of good tax governance has increased from 25% in 2015 to 43% this year.

On the whole, this year we have seen an improvement in all companies (wherever they rank), which is encouraging news. The top 10 companies scored, on average, 76% on our six principles of good tax governance. This has increased from 61% since 2018. In addition, the number of companies scoring below 10 points declined from 31 in 2018 to 23 companies this year. It is also positive to see that 69% of the participating companies provided feedback to us on their initial assessment. Overall, in 2019 companies have a better understanding of what corporate tax responsibility is and communicate more comprehensively and publicly on tax matters.

Below we outline the most significant conclusions and recommendations for each of the six principles of good tax governance defined by VBDO and Oikos in 2014. The table shows the average score for each of the principles for 2019 compared with 2018. In 2018, we conducted an overhaul of the Tax Transparency Benchmark methodology; therefore, this year’s results are only comparable to those in last year’s benchmark.

  2019 2018
Good Tax Governance Principles Average % scored by companies per principle Average % scored by companies per principle

A. Define and communicate a clear strategy

53%

44%

B. Tax must be aligned with the business and is not a profit centre by itself

52%

41%

C. Respect the spirit of the law. Tax-compliant behaviour is the norm

34%

54%

D. Know and manage tax risks

55%

37%

E. Monitor and test tax controls

47%

31%

F. Provide tax assurance

18%

15%

This number gives the average aggregated result of the six Good Tax Governance Principles

43%

39%

Figure 1: TTB2019 results per Good Tax Governance Principle

A. Define and communicate a clear strategy

  • 86% of the companies communicate their views on tax via a tax strategy or policy;
  • Companies have improved on well how they disclose the alignment of the tax strategy with the organisational values (45%), with the business strategy (52%) and with the sustainability strategy (45%).

Never before have so many companies included in the benchmark communicated their views on tax by means of a tax policy or tax strategy. This is an indication of the growing importance of tax transparency to companies. However, there is room for further improvement in communicating that the tax strategy is aligned with the organisational values, the business strategy and the sustainability strategy, in order to show stakeholders that tax is not seen as an isolated business component. Moreover, it is still the case that only 43% of the companies explicitly state that the tax strategy is included in discussions with their stakeholders. We encourage companies to engage in this dialogue and also to provide evidence to stakeholders that the approach to tax is discussed and approved at board level, which is currently done by only 34% of the participating companies. Finally, we encourage companies to include their vision on tax technology.

B. Tax must be aligned with the business and is not a profit centre in itself

  • 79% of the companies state that ‘business is leading’ the way in setting up international taxation structures and 65% communicate that they do not make use of tax havens;
  • Only 9% provide full country-by-country information on where taxes are paid and where in the world value is created.

It is still the case that too few companies disclose country-by-country information on where taxes are paid and value is created. Yet, this provides very relevant information to stakeholders about a company’s scale of activity and its approach to taxes and payments to governments across the tax jurisdictions in which it operates. More companies than last year stated that ‘tax follows business’ (79%) and that they do not make use of tax havens (65%).

It is promising to see that the number of companies that provide a narrative description accompanying their effective to statutory tax rate reconciliation has increased from 26% in 2018 to 62% this year. This is, therefore, fully in line with our explicit recommendation in last year’s Tax Transparency Benchmark.

C. Respect the spirit of the law. Tax compliant behaviour is the norm

  • 31% of the companies have a training programme in place for tax, legal and compliance officers on how to deal with tax (dilemmas);
  • 14% have a whistleblower policy in place that explicitly refers to tax.

In 2018, we decided to change the way points were awarded with respect to the question regarding the whistleblower policy. Companies were informed in 2018 and the change came into effect for the 2019 benchmark. In 2018, merely having a whistleblower policy in place was sufficient. This year, the whistleblower policy needed to refer explicitly to tax in order for a company to score. This is why only 14% of the companies obtained a point for this question in 2019, whereas over 90% did in 2018. We recommend companies include a special paragraph relating to taxes in their whistleblower policies to ensure that employees and other stakeholders can report concerns about unethical or unlawful tax related behaviour and/or activities that compromise the company’s integrity in relation to taxes.

Furthermore, to reassure stakeholders that the company’s tax strategy is effectively embedded in the organisation, companies need to invest in and report on training programmes for their employees on how to deal with tax dilemmas.

D. Know and manage tax risks

  • Companies scored highest on this principle this year;
  • 81% of the companies report tax risks and 56% describe risks in detail.

This year’s results show that the way companies deal with their risk management is improving. Companies did better on their disclosure in describing tax risks in detail and provided a description of their response to these risks. This provides stakeholders with a better understanding of the potential and actual risks involved and how these tax risks are managed within the organisation. We continue to recommend that companies elaborate more on tax risks, risk appetite and risk response in publicly available information.

E. Monitor and test tax controls

  • More than half of the companies describe how tax risks and controls are tested and monitored;
  • One third of the companies describe how the implementation and execution of the tax strategy is monitored.

We are pleased to see that more companies compared to last year describe how tax risks and controls are tested and monitored. However, there is still room for improvement as 70% of the companies still do not describe how the implementation and execution of the tax strategy is monitored. Having a process in place to monitor the implementation and execution of the tax strategy helps the organisation with the actual and timely implementation thereof.

F. Provide tax assurance

  • Four companies provide a tax in-control statement;
  • Only one company provides third-party tax assurance.

In the area of tax assurance, companies still have quite a long way to go. Only four companies included in this benchmark provided a tax in-control statement and only one company provided third-party tax assurance to stakeholders. Communicating on the external review of your tax function gives stakeholder more confidence. This could mean increased board involvement (tax in-control statement), implementing checks and balances with the tax authorities (co-operative compliance) or supervision by a third party (third party tax assurance). All these forms will provide additional assurance to stakeholders about the tax function. While more companies have additional financial data assured, non-financial tax data remains unaudited by most.

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Eelco van der Enden

Eelco van der Enden

Partner, PwC Netherlands

Tel: +31 (0)88 792 51 38

Bob van der Made

Bob van der Made

Project Manager, Senior Adviser EU-Brussels (TAX), PwC Netherlands

Tel: +31 (0)88 792 36 96

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