Group Tax Strategy
In accordance with paragraph 16(2) of Schedule 19 of the Finance Act 2016, this tax strategy applies to the Group PLC and its subsidiaries for the year ended 31 December 2020. There has been no substantive change to the tax strategy from the previous year.
Overall the board is ultimately accountable for tax risk within the Group; identification of tax risk is the responsibility of the Group Tax Manager. The Group Tax Manager is also responsible for ensuring that policies and procedures supporting the Group Tax Strategy are in place and are followed consistently in all areas of the business.
The Group seeks to deliver value for shareholders from the discovery and development of hydrocarbons within a sustainable self-funding business model: maintaining a balanced portfolio, seeking operation excellence and delivering a sustainable business.
In its approach to tax, the Group aims to be a good corporate citizen, managing its tax affairs in a transparent and responsible manner in all the jurisdictions in which it operates. We are committed to complying with tax laws and having open and constructive relationships with all tax authorities.
The Group’s activities have been focused on assets at exploration, appraisal and development stages; from 2017, production income has been received for the first time for several years. Due to the level of costs incurred in developing the fields which are now generating income, it is unlikely that any taxable profits will be realised in the current year. However, the Group does pay employer taxes, stamp and import duties and other taxes including sales taxes as well as collecting and remitting employee taxes and withholding taxes thereby contributing significantly to the economy of the countries in which it operates.
In its approach to tax, the Group relies on the following key principles:
Risk Management and Governance
Corporate responsibility is key to the Company and its business principles are based on these core values:
- Respect: we act with respect for people, their communities, the environment, human rights and the law.
- Responsibility: we behave fairly and ethically and are accountable for our actions. The Group believes in, and acts on, its responsibility to care for people, society and the environment.
- Relationships: we act honestly, transparently and with integrity to develop strong, lasting relationships with all our stakeholders.
As part of the Group’s internal control framework, it follows the Comany Risk Management Process. Tax risks are included in that process. We identify, assess and manage tax risk and report these to the Group Risk Management Committee (RMC) which meets regularly throughout the year. The RMC reports to the Audit Committee of the Board and the main Board undertakes a risk workshop annually which considers attitude to and management of risk across the Group.
The Group aims for certainty in relation to the tax treatments of all items but acknowledges that this will not always be possible for instance where transactions are complex or the jurisdiction in which the Group operates has a tax regime which is new or untested.
Tax law can be open to interpretation and where uncertainty exists the Group will form an internal view and take written advice from external advisors on any ambiguous area.
The Group does not tolerate the facilitation of tax evasion by anyone acting for or on behalf of the Company and we have robust procedures in place to identify and mitigate any risk of tax evasion facilitation.
The Company undertakes tax planning that supports our business and reflects commercial and economic activity. The Group’s policy is not to enter into any artificial tax avoidance schemes.
The Company will base its views on the relevant tax laws in force at the time and seeks to minimise disputes.
Where governments in the jurisdictions in which we operate offer incentives or exemptions to encourage investment, we seek to apply these in the manner intended as part of the overall investment arrangements.
Relationships with Tax Authorities
The Group seeks to build and maintain strong collaborative working relationships with all relevant tax authorities.
We engage with governments and tax authorities in the development of tax law and guidance both directly and through industry bodies.
We will not consider any arrangement which relies on less than full disclosure to HMRC or other tax authorities.
This policy will be reviewed and updated annually or as appropriate. It was last approved on 26 November 2020.