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 27 February 2016, we paid total cash taxes of £1.3 billion, of which £1billion was paid in the UK. As well as being a major contributor, we also act as a collector of taxes for the tax authorities in the countries in which we operate. The Group collected £2.7bn of such taxes in the year.

In the 52 weeks ended 27 February 2016, as a Group we received a net refund of corporate income tax of £118m. In the 53 weeks ended 28 February 2015, the business posted a loss of £6.4 billion, primarily as a result of the decline in the value of our property portfolio, which, under UK tax law, gave rise to a UK taxable loss. This loss was “carried back” and offset against the taxable profits of the year ended 27 February 2014, causing a refund of taxes paid on that year’s profits.

In addition to corporate income tax we pay a significant number of other taxes. In the 52 weeks ended 27 February 2016 these totalled nearly £1.5 billion. The most significant other tax paid across the Group is business rates in the UK which amounted to nearly £700m in the year. Other taxes included in this category are Employer’s National Insurance, Excise duties and non-recoverable VAT.

We participate in the PwC Total Tax Contribution for The Hundred Group of Finance Directors. Over the last 5 years, out of the Survey participants we have consistently been 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.