Our Approach to Tax

Year Ended 31 December 2023

Prepared in accordance with the requirements of Schedule 19, Finance Act 2016. 

We believe in responsible tax behaviour as an essential part of our Brew a Better World strategy. The taxes we pay contribute to local economies and support the development of the many countries in which we operate.

We support stable, transparent, and predictable tax regimes that incentivise long-term investment and economic growth. 

Tax strategy

Our tax strategy is fully aligned with the EverGreen strategy and our business and organisational values. This strategy is annually reviewed and approved both by the Executive Board and the Audit Committee (part of the Supervisory Board). The tax strategy adheres to the following key principles: 

• Our commitment to comply with relevant tax laws and international regulations, we aim to comply with the letter as well as the spirit of the law.
• Compliance with the HEINEKEN Code of Conduct.
• Expectation that we will pay tax in the country where our activities take place. We fully support and follow the OECD transfer pricing guidelines and transactions between HEINEKEN operating companies are based on the ‘arm’s length’ principle;
• Not using tax havens for tax avoidance purposes ; and
• Open and constructive dialogue with tax authorities that is based on mutual respect, transparency and trust. We have co-operative compliance relationships with tax authorities in various countries. For the UK, this is HM Revenue & Customs.
  
   

Tax governance

Risk profile

HEINEKEN operates in more than 70 countries around the world and is subject to diverse tax legislation. 

Tax legislation is often complex and subject to interpretation, meaning expert understanding and careful judgement is key. Failure to comply with applicable regulations could lead to fines, claims and reputational damage.

Our tax principles provide guidance on exercising judgement and ensure consistent understanding of HEINEKEN’S position on risk.

At HEINEKEN, risk management is an integral part of doing business, supported by clear governance. We have an integrated approach to risk management whereby risks are identified, mitigated, and monitored on an ongoing basis, aligning with our risk appetite and supporting our business objectives.

HEINEKEN's internal control activities ensure accurate financial information, compliance with laws and policies, and effective internal processes. Controls are defined at operating entity and process level for key processes, including financial reporting and tax. Compliance is assessed periodically, deviations are monitored globally, and management addresses deficiencies through action plans. 

We follow a "three lines of defence" model for risk management. Operational management takes ownership of risk assessment and mitigation, supported by second-line functions that oversee compliance and drive internal control improvements. Our internal audit function provides independent assurance based on group-wide reviews of key processes, projects and systems, incl. tax related matters.

The Heineken Tax Control Framework (“HTCF”) is at the heart of our tax governance model. The objective of the HTCF is to be in control of all taxes and duties borne and collected by the HEINEKEN Group. The HTCF is designed to provide verifiable assurance that HEINEKEN’s tax risks are identified and managed in compliance with applicable laws and regulations. The HTCF is a structured set of standards, procedures, and controls to ensure compliance with tax laws and regulations. It provides a systematic approach to identify, assess, and manage tax risks, as well as to monitor and report on tax-related activities. The HTCF aims to establish transparency, accountability, and effective governance for tax matters within Heineken.

We use an online tool to monitor the annual compliance of HEINEKEN operating companies with the HTCF. Furthermore, management confirms compliance with (tax) laws and regulations through a formal bi-annual Letter of Representation to the Executive Board.

Risk appetite and attitude to tax planning

Our business structures are driven by commercial considerations, reflect commercial and economic activity and have genuine substance. We do not engage in artificial tax arrangements.

Our tax risk appetite is based on HEINEKEN’s financial and compliance risk appetite, being low to medium. While HEINEKEN is committed to comply with the law, as a multinational operating in a large number of jurisdictions we are inherently exposed to a number of tax risks and in some cases significant judgement is required. We aim to minimize these risks to the maximum extent possible. We consider tax risks to be a reputational and compliance risk, as well as a financial risk.

Compliance with applicable tax laws and regulations is our overriding principle. We aim to comply with the letter as well as the spirit of the law. Where there is significant uncertainty or complexity in tax legislation, we seek advice from external experts to be confident that our tax returns are correct and, where deemed appropriate, obtain upfront certainty by reaching agreements with tax authorities.

We interpret UK tax law in a reasonable manner taking into account both the purpose and intent of the law. Where there is significant uncertainty or complexity in relation to tax, we may seek advice from external experts. This gives us confidence that our tax returns are correct.

Organisation

It is the main objective of the Group tax function that all HEINEKEN operating companies are tax compliant. It manages relationships and communications with tax authorities and advises management on tax-related topics, including changes and developments. External advisors are involved in material transactions, or when a specific area of expertise is required. 

HEINEKEN operates a relatively decentralised business model. Every operating company maintains a certain level of control over its value chain, within the framework and principles determined by the Group. 

The Group tax strategy is set annually by the Senior Director Global Tax and approved by the Executive Board. The Audit Committee  is updated on tax strategy and challenges annually and on uncertain tax positions and effective tax rate bi-annually. 

Local Tax Managers execute the Group tax strategy under the leadership of local Finance Directors. They are monitored and supported by the central Global Tax department, while also having access to practical guidance as set out in the HTCF. 

The UK Head of Tax reports to the UK Finance Director. The UK Head of Tax is responsible for all taxes which impact the HEINEKEN UK (“HUK”) corporate group, with the HR department having day to day responsibility for employee taxes. The HUK tax team members are suitably trained and experienced to deal with administration of the other taxes. The input of suitably qualified external advisors is a key source of expertise to supplement the skills of the HUK tax team. External advisors are therefore used when required on specialist matters.  

HUK carries out an assessment on an annual basis against the HEINEKEN Tax Control Framework to identify any potential improvements that could be made regarding tax risk management.

Management actively promotes the Heineken Code of Conduct, ensuring that the tax function completes regular training programs that offer practical guidance on applying and upholding the Code of Conduct in their daily work.

We do not condone, encourage or support tax evasion. Any ethical and compliance concerns may be raised through HEINEKEN’s Speak Up channels. When facing a conflict, employees are bound by the Code of Conduct. 

Approach towards dealings with HMRC

We seek to develop strong relations with HMRC based on respect, transparency and trust. We are committed to a collaborative approach to our dealings with HMRC.  
We engage with HMRC through our Customer Compliance Manager to discuss our tax affairs on a real time basis.

We take care to ensure that our tax affairs are reported accurately. We would seek to voluntarily disclose any errors found in a submitted tax return, quantifying the effect of any error and paying any additional tax, interest and penalties due as a result.  

HEINEKEN is committed to paying the right amount of tax in the UK, and to work collaboratively with the tax authorities.  

Updated on 22 December 2023.