Tax Strategy
“With our longstanding practice of Good Corporate Governance, GC is committed to be transparent, responsible and accountable in all tax matters, aiming to build sustainable trust with stakeholders and societies where we operate.”
In support of our overall business strategy and objectives, GC pursues a tax strategy that is principled, transparent and sustainable in the long term. We have established principles governing our strategy and related tax policies, which have been the result of a longstanding GC practice.
Chairman of the Risk Management Committee has given precedence to risk management including taxation risks. The Management reported the progress of risk management activities to the BOD on a regular basis. Additionally, the Audit Committee reviews the effectiveness of risk management based on business performance reports, internal audit reports and auditor reports. These could reasonably assure that the Company would be able to mitigate potential risks down to acceptable level.
We are committed in our responsibility towards our stakeholders in the widest sense and we set our ambition on ensuring sustainable continuity, proper business and commercial rationale in our daily practice, including proper management of resources and flexibility of management to face the increasingly complex international taxation landscape.
In that spirit, our tax policy consists of three pillars:
To comply with Tax compliance. GC Group shall adopt good corporate governance. We strive to achieve sustainable and competitive company taxation and sustainable value and growth including good corporate tax citizenship with added value for society.
Tax Compliance
GC aims to ensure that our tax management is complied with tax laws and regulations. We provide and update Tax Procedures to tax operational areas and also launch Tax Alert of new tax legislation and any interpretation of existing legislation and deliver to the companies under GC group in Thailand to support their works as well as ensuring tax compliance. To control efficient tax process, we apply Control Self Assessment (CSA) aligned with internal control policy to identify tax risks and key controls, assess the effectiveness of existing controls, and monitor control deficiency or mitigation practice and also communicated and deployed the CSA to the domestic subsidiaries & JVs.
Tax Governance
We gave due regard to comply with Transfer Pricing Act in Thailand which has been enforced starting from 1 January 2019. We completed Local File to demonstrate compliance in this regard but also our international subsidiaries & JVs completed the Local File according to local regulations. We have connected with PTT to complete Master File and Country-by-Country Report (CbCR) to support group’s compliance. Surrogate Parent Entity (SPE) in U.K. has been appointed to submit CbCR on behalf of PTT group. Furthermore, we undertake further to monitor Transfer Pricing to ensure that the policy of the Group are appropriately aligned with Arm’s length principle.
We adhere and fully comply with tax laws and regulations in all jurisdictions where we operate. Tax risk management and mitigation plan are in place to suitably handle the emerging risks and tax consequences due to changes in governments’ tax policies or administrative tax practices. This encompasses maintenance of documented policies and procedures in relation to tax risk management and completion of thorough risk assessments in all taxation affairs.
Furthermore, we prioritize addressing foreign investment risks, particularly those affecting tax reputation, notably in identified tax haven jurisdictions. Consequently, GC has directed investments towards non-operating entities such as holding companies and investment funds. We refrain from investing in high-risk jurisdictions, which may lack Corporate Income Tax, fail to comply with BEPS (Base Erosion and Profit Shifting) standards outlined by the OECD (Organisation for Economic Co-operation and Development), or do not commit to exchanging information (EOI) on tax matters as Global Forum members, as per BEPS Action 5: Harmful Tax Practices.
We are transparent in our tax communication to governments, fulfilling all statutory disclosure requirements on taxation. We welcome the recent developments relating to public disclosure of tax strategies of companies and accompanying economic contribution reporting. GC’s good corporate citizenship includes excellence in tax governance, tax accountability and tax transparency, in order to ensure building trust with societies and stakeholders.
Tax Roadmap
Tax Governance
- The Management Committee and CEO, representatives of Board of Directors, endorses our Tax Strategy and Tax Policy
- Strengthen Tax Governance, Policy, Guidelines
- Complete and update Transfer Pricing align with OECD guidelines and further closing gaps under Arm's length principle
Tax Risk Management
- Execute Tax Risk Management and monitor work plan to mitigate tax risk of the Group
- Regularly conduct Tax Health Check by external tax advisor
- Perform Tax training program and knowledge sharing
- Commit to avoid tarnishing the tax reputation from investing in Tax havens
- Plan and monitor Transfer Pricing Risk Analysis among the Group
- Specific tax risks related to BEPS projects are continuously monitored (e.g. Substance, BEPS 2.0)New
Tax Compliance
- Provide and update Tax Procedures
- Launch Tax Alert of new laws and regulations
- Apply Control Self-Assessment (CSA) for tax process
- Deploy Digital tools relating to tax automation process to the GroupNew
- Enhance Tax automation ; Tax compliance monitoring and Tax Advisory website, BEPS project;New
- Accessibility tax compliance of e-Platform; e-Filling, e-Tax Invoice & e-Receipt, e-Withholding Tax (WHT), e-tax coupon, e-stamp, etc.
- Implement Robotic Process Automation (RPA) Roadmap on tax transactional; VAT, WHT, and Excise Tax,
Tax Governance
GC Tax Strategy and Tax Policy have been endorsed by the Management Committee and CEO, the representatives of Board of Directors. GC has appointed the Tax Strategy and Planning Division and Tax Management Division to be responsible for the development and implementation of tax matters and providing assurance based on our tax compliance and management.
We strengthen Tax Governance by deployment of Tax Policy and Guidelines, as well as monitoring of Tax Compliance Checklist with local tax laws to domestic subsidiaries & JVs annually, which are part of the GC Way of Conduct, to ensure the operation of such companies is consistent with GC, has the same standard, transparency and good governance system that keeps the business operation across GC Group and drives the business towards sustainability.
We gave due regard to comply with Transfer Pricing Act in Thailand which has been enforced starting from 1 January 2019 by completed Local File in this regard. Our international subsidiaries & JVs also completed the Local File according to their local regulations. We have supported PTT to complete Master File and Country-by-Country Report (CbCR) in order to group’s compliance. Furthermore, we undertake further to monitor Transfer Pricing to ensure that the Group’s policy is appropriately aligned with Arm’s length principle.
Tax Risk Management
GC Group applies Tax Risk Management Guideline including Tax Control Framework referencing COSO framework. We perform annually Tax Risk Assessment and monitor mitigation plan. We focus on Transfer Pricing Risk and set process and guideline in place to manage and monitor on this matter among the Group.
We provide the long-term plan of Tax Health Check for every five-years for the Group. On this aspect, we engage external tax advisor to review the accuracy of tax filing, process and provide expert recommendation for effective compliance of the Group. In accordance with our commitment to develop the tax competency, we set ongoing training program for Finance & Accounting staff in both tax strategy and planning and operational areas. The program is classified into three levels: i) Basic, ii) Intermediate and iii) Advance, to offer variety of tax courses for Tax Professional Team. These enable participants to apply the knowledge gained during training and knowledge sharing to their works. The knowledge sharing portal was created to store the training material and are accessible to self-learners.
With regard to foreign investment, we place an awareness on tax reputation risk and commit to avoid an investment through jurisdictions considered as tax havens under BEPS Action 5: Harmful Tax Practices and set guidelines for the consideration of foreign investment to serve this policy.
Furthermore, since the G20 countries, together with the Organization for Economic Co-operation and Development (OECD) set out to address the Base Erosion and Profits Shifting (BEPS) Project such as Transfer Pricing, Substance requirements and BEPS 2.0, GC has promptly raised awareness and monitored tax risks related to BEPS project across the Group. Therefore, we have continuously investigated and issued the principles and guidelines in order to mitigate tax risks which comply with the rules and regulations.
Tax Compliance
GC aims to ensure that our tax management is complied with tax laws and regulations. We provide and update Tax Procedures to tax operational areas and also launch Tax Alert of new tax legislation and any interpretation of existing legislation and deliver to the companies under GC group in Thailand to support their works as well as ensuring tax compliance.
To control efficient tax process, we apply Control Self Assessment (CSA) aligned with internal control policy to identify tax risks and key controls, assess the effectiveness of existing controls, and monitor control deficiency or mitigation practice and also communicated and deployed the CSA to the domestic subsidiaries & JVs.
We take an opportunity of available financial technology and global trend to enhance Group’s agility by developing overall tax compliances. We deploy related digital tools to ensure digital solutions for Finance & Accounting. This includes effective tax automation enhancements to existing ERP systems will need to be done to systematically extract the relevant data that complied with relevant standards and regulations. Tax automation via web application was built to support in this regard. These include tax compliance monitoring, updated relevant law and regulations, lesson learn from tax audit, tax knowledge sharing, and tax advisory. We enhance an automatic system to boost accuracy and efficiency through e-platform which the tax information is automatically transferred to the Thai Government Agencies such as e-filing, e-Tax Invoice & e-Receipt, e-Withholding Tax (WHT) system, e-tax coupon and e-stamp.
Furthermore, implement Robotic Process Automation (RPA) which is an automate rule-based processes through intelligent automation for Finance & Accounting function. Our RPA roadmap includes automated tax transactional processes to mitigate compliance risk of Value Added Tax (VAT), WHT, and Excise Tax.
Tax Risk Governance
GC risk management structure consists of the three levels, which are corporate level, business unit level and operational level. This is to ensure that major risk is completely identified, suitable and sufficient measures are available to mitigate risk and the effectiveness of risk management can be evaluated across GC’s organization.
For more detail on Risk and Crisis Management Structure, please see Risk Governance
Tax Risk Management and Tax Control Framework
Referring to GC Tax Strategy, GC is committed to be transparent, responsible and accountable in all tax matters, aiming to build sustainable trust with all stakeholder groups and societies where we operate. In that spirit, GC has established the GC Tax Risk Management and Tax Control Framework, which enables GC to meet the commitments of our Tax Strategy.
GC Tax risk Management focuses on managing the risk associated with taxes for our Thai and foreign entities e.g. improving controls over tax financial reporting requirements, managing the global tax audit activity, determining that compliance with tax requirements in all jurisdiction, providing access to expertise in each jurisdiction and accurately reporting global tax accounts by jurisdiction.
GC has developed the GC Tax Control Framework, which enables GC to meet the objectives of Tax Risk Management. GC Tax Control Framework can be defined as a set of processes, roles, responsibilities, reporting and mitigating policies for GC business transactions with possible tax consequences. This means that GC aims to be "in control" of all key tax issues, being able to detect, document and report any relevant material tax risks in a timely way, and bringing all tax processes in the scope of the Tax Control Framework. The GC Tax Control Framework should enable GC to identify, mitigate, control and report tax risks internally and when necessary externally.
GC has customized COSO model is composed of the three following dimensions:
Dimension 1: Tax risk internal control process
In order to implement GC Tax Control Framework, we have set out a tax risk internal control process as described below;
- Business operations - Define business operation models. We evaluate the type and size of business activity different business activities (i.e. manufacturing, sale and marketing, R&D, and holding activity) will lead to different tax risks.
- General tax environment - Define general tax environments for all countries and jurisdictions in which we operate. We are aware that changes in tax laws and regulations and tax culture in each certain country or jurisdiction will affect our tax risk.
- Tax compliance requirements - Identify and monitor tax compliance requirements and risks in all countries where we operate. These include tax filing, tax payment for all applicable taxes and other related compliance requirements such as transfer pricing documentation.
- Tax operations process - Set out tax operation process which enables GC to meet all compliance requirements, which includes identification of roles and responsibilities within the tax function and workflows for each tax operation.
- Risk identification - Identify tax risks for key taxes and for all jurisdictions where we operate based on information received from process (1) – (4) of GC tax risk internal control process. GC determines the scale and probability of the risks and their impact to the financial statement. These two criteria determine how tax risks should be managed.
- Risk mitigation – The risk mitigation procedures has been set to manage key identifiable tax risks, in order to assure that GC would be able to mitigate the potential tax risks down to an acceptable level. Risk mitigation shall include;
- Accept the risk - acknowledge the existence of a particular risk;
- Monitor the risk - actively monitor the process and compliance requirements for changes that impact tax risk;
- Control the risk - actively implement actions in the tax process to minimize the impact or likelihood of the risk;
- Avoid the risk - actively adjust the tax process, or roles to eliminate or reduce the risk; and
- Transfer the risk - reassign organizational accountability, responsibility, and authority to another stakeholder willing to accept the risk or insure the risk with group or third party insurance providers.
- Control mechanisms - Control mechanism is the internal control aimed at mitigating risk. Control activities will be performed at all levels of the entity, at various stages within business processes, and within the available technology environment.
Control activities involve the designing, implementing and executing of key controls with the aim of controlling the inherent risks in the process. Key controls also include authorizations and approvals, verifications, reconciliations, business performance reviews and segregation of duties.
GC has regularly monitored the internal control mechanisms to ensure that the effectiveness of the internal control and any control deficiency will be improved consistently.
Dimension 2: Tax risk identification
The different types of tax risks will be defined in dimension 2. Every entity faces a variety of risks from external and internal sources that must be assessed. Potential tax risks shall be classified into;
- Transactional risk – the risks and exposures associated with specific (non- recurring) transactions undertaken by a company such as acquisitions, disposals, mergers, financing transactions, tax driven cross border transactions, internal reorganizations and foreign assignments of staff.
- Operational risk – the risks of applying the tax laws, regulations and decisions to the routine everyday business operations of a company such as starting new business ventures, new operating models and operating in new locations.
- Compliance risk – primarily relates to the preparation, completion and review of an organization’s tax returns and the risks within those processes as well as correspondence with tax authorities. All to ensure timely and correct filing of the applicable returns and paying taxes due.
- Finance and accounting risk – mainly relates to changes in accounting policies and IFRS/GAAP, changes in legislation and changes in accounting systems.
- Management/HR risk – primarily relates to changes in tax personnel without proper succession and recruitment strategies. GC strategically control risk related to HR to ensure appropriate documentation of relevant tax information and processes within the tax function.
- Reputation risk – Potential impact on GC Group’s reputation could influence both current and future business operations and revenue.
Dimension 3: Key taxes defined
The key taxes defined includes corporate income tax, value added tax, withholding tax, excise duties and any other tax relevant in the respective jurisdictions of GC and its subsidiaries. Major considerations for each key taxes defined are described below;
Corporate Income Tax
- Corporate tax incentives – requirements for application of these privileges need strict accounting records and proper monitoring of business activities.
- Substance requirements – the risk is that if a company does not comply with the relevant substance requirements in a specific country, it could result in adverse tax consequences, including a penalty risk.
- Ongoing monitoring of changes in tax law and regulations.
- Rapid change in tax systems. For example, many countries are introducing the filing of electronic tax returns so GC shall ensure that the capabilities are in place to meet all system requirements.
Value Added Tax (VAT) or Goods and Services Tax (GST)
- Supply chain risk – the entity should properly understand key supply chain flow. Changing in supply chain can give rise to VAT issues.
- Geographical risk – proper understanding of relevant local compliance to determine whether the entity is required to register and account for VAT in those countries where it trades or is deemed to trade.
- Business process risk, which include possibility of human error, reconciliation of invoices with supporting documents, proper providing required documentation for tax audits.
- External risk such as legislative developments, more sophisticated tax audits.
Withholding Tax
- Double Tax treaties. The withholding tax exposures are influenced by the application of tax treaties and therefore proper review of the most beneficial tax treaty rate is necessary.
- Certain countries apply a wide scope and/or different definition of payments that may be subject to withholding taxes e.g. management or professional fees, royalties.
- Certain countries apply withholding taxes on non-resident companies on profits or income relating to property, which they own.
- Proper application of crediting withholding taxes in the corporate tax return.
- Reporting requirements for the payments. Some jurisdictions require annual reporting within a specified period after the withholding occurs.
Excise Duties
- Proper application of excise duty regulations and compliance.
- Tariff classification analysis of excise goods in the process of obtaining binding excise information (BEI).
- Tariff classification analysis of excise goods and complex representation in the process of obtaining binding excise information (BEI).
Tax Control Framework will be filled in, monitored, and regularly evaluated on proper functioning for all GC legal entities. The functioning of the GC Tax Control Framework will be presented to GC Risk Management Committee on a regular basis.