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 and 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.
In addition, the Group may contribute to the analysis of legislative changes at the request of Tax and Customs Authorities or professional associations requested for said changes. 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 tax risks are reported to the General Management and the Audit Committee.
Compliance with these three pillars is ensured by centralised expertise and a strong geographical presence of tax function in the countries.
Tax compliance falls under the responsibility of the Chief Financial Officers, backed up and relayed by the Tax and Accounting Departments. These Departments, assisted where applicable by external advisors, monitor changes in tax regulations to ensure that the Group complies with these regulations.
Within the Department of Operational Finance, the Group Tax Department ensures compliance with the Tax Policy in collaboration with the Finance Departments through the relay of different group-wide tax experts:
In order to enhance these centres of expertise, two new functions were created in 2021:
In the zones and countries, the tax function is directly represented in 30 countries by local tax departments operating under the accountability of the Country/Zone Chief Financial Officer. The Tax Directors have different responsibilities:
This matrix organisation, combined with the Group’s tax policy respect, are the basis of successful management of the tax burden and a responsible tax practice.
