Tesco Tax Principles

Our approach to tax

We understand the importance of the taxes we pay in supporting the development and growth of the communities in which we operate and take a responsible approach in respect of our tax obligations.

We operate under the following principles: 

  • We shall only engage in tax planning that is aligned with commercial and economic activity and does not lead to an abusive result
  • We shall interpret the relevant tax laws in a way consistent with a relationship of “co-operative compliance” with relevant tax authorities
  • In international matters, we shall follow the terms of the relevant Double Taxation Treaties and relevant OECD guidelines in dealing with such issues as transfer pricing and establishing taxable presence, and shall engage constructively in international dialogue on the review of global tax rules and the need for any changes
  • We may respond to tax incentives and exemptions
  • We shall be open and transparent with tax authorities about our tax affairs and provide all relevant information that is necessary for those authorities to review possible tax risks
  • We shall work collaboratively with tax authorities to achieve early agreement on disputed issues and certainty on a real-time basis, wherever possible

Tax contribution

For the 52 weeks ended 25 February 2017, we paid a total of £1.6 billion in cash taxes of which £1.3 billion was paid in the UK and the Republic of Ireland. As well as making a substantial tax contribution in the markets in which we operate, we act as a collector of taxes for the tax authorities in these countries, collecting and paying £2.8 billion of such taxes in the year.

In the 52 weeks ended 25 February 2017, the Group made payments of corporate income tax (after refunds) of £47 million.

In addition to corporate income tax, we pay a significant amount in other taxes. In the 52 weeks ended 25 February 2017, these totalled £1.6 billion, including business rates in the UK which amounted to nearly £700m. Other taxes include employer’s national insurance contributions, excise duties, non-recoverable VAT, and environmental taxes such as climate change levy and carbon commitment energy efficiency tax.

We participate in the PwC Total Tax Contribution Survey for the Hundred Group of Finance directors where we have consistently ranked as one of the UK’s largest tax payers.

Country by country reporting

The UK Government adopted the OECD’s Base Erosion and Profit Shifting recommendations requiring multinationals to submit country by country tax reports to tax authorities. We shall comply with this obligation for the year ending 25 February 2017, by submission of a report to HMRC by the end of February 2018.