Bayer's Approach to Tax
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Aligned with our core LIFE values, we are committed to ensuring that Bayer’s tax affairs are responsibly managed, and we are consistently recognized by all our stakeholders as a responsible and reliable taxpayer.
It is a matter of principle for Bayer that we pay the amount of tax legally due in any country and/or territory, in accordance with the rules set by the respective governments. Appropriate payment of taxes is a core element of our corporate social responsibility. Bayer’s total tax payments provide essential revenues for governments needed for the fulfillment of their social, economic and societal tasks. We comply with all relevant tax regulations as well as filing, documentation, disclosures and approval requirements in all countries/territories in which Bayer operates.
The objectives and principles of tax management at Bayer are set out in our internal tax regulation, which is mandatory for all employees to follow. The key principles are:
- Strong opposition against any noncompliance, foremost tax fraud
- Tax payments in line with respective value creation in each country/territory
- Tax competitiveness in line with business reasons/needs
- Cooperative approach with tax authorities
The above principles are incorporated in the design of the tax strategy which is further aligned with the corporate and business strategy as well as the LIFE values and approved by the Bayer AG Board of Management.
The regulation provides clear lines of accountability, responsibility and organization for the tax function as a whole and confirms that the Global Head of Tax is accountable and has global responsibility for all taxes and tax effects relating to Bayer activities. The Head of Tax reports to the Head of Group Finance and both update the Chief Financial Officer of Bayer on a regular basis on all important tax related issues. Beyond, the Head of Group Finance and/or the Global Head of Tax report regularly to both the Board of Management and the Audit Committee (of the Supervisory board).
Tax Risk Attitude and Management
Taxation of international business is very complex, and uncertainties arise in the application or interpretation of tax laws, resulting in tax risks. Within Bayer, we follow a well-balanced approach to tax risk, taking into account a number of factors including reputation, social aspects, shareholder value along with economic and operational factors.
Tax processes play a key role in managing our tax risk and the efficient operation of the tax function. We have set up and maintain robust policies including Internal Control Systems processes and documentary requirements in order to ensure we meet our tax obligations in every country in which we operate. It is also a requirement for all Bayer tax professionals to have the necessary knowledge and qualifications and receive ongoing trainings to fulfill compliance requirements. Tax risks are also routinely monitored as part of our internal compliance procedures to enable appropriate assessment and management. Advice may also be sought from third party advisors to support the decision-making process.
Tax Planning, Transparency and Relationship with Tax Authorities
We fully appreciate that jurisdictions need sufficient funding to provide favorable business conditions that are fundamental for all Bayer operations. In accordance with this and our core LIFE values, we do not engage in artificial transactions without business substance. Our approach to tax planning is that tax optimization should follow business needs and that profits are taxed with regard to our global value chain. In this regard, we apply the law as it exists in the respective jurisdiction and according to profit distribution rules that were defined by the OECD and are internationally accepted. As a German-based corporation we also follow strict German Controlled Foreign Company rules which act to prevent so-called profit shifting activities.
Where appropriate we will make use of government sponsored incentives and reliefs, such as R&D tax credits as they are provided by respective domestic regulations that apply to all eligible taxpayers.
Remaining transparent and having a cooperative relationship between Bayer and all relevant tax authorities is a crucial process in terms of creating trust that also supports reducing tax risks or disputes. Where appropriate we will seek advance pricing agreements with authorities in order to provide legal certainty. We proactively anticipate and prepare all relevant documentation where possible in order to provide evidence in a timely fashion of all tax matters and functions globally.
Bayer is dedicated to compliance, particularly in terms of major transactions or transparent reporting within the fiscal year. Bayer’s tax policy ensures timely and full compliance also in the context of tax audits as well as all tax transparency requirements.