Bayer's Approach to Tax

Bayer’s Approach to Tax follows a principle, which we call “5-C”. It reinforces our internal tax regulation and is mandatory for all employees to follow.

• Compliance
• Competitiveness
• Cooperation
• Clarity and Certainty 
• Control and Governance

Our Commitment: Bayer is dedicated to compliance, in terms of our transactions, tax audits or transparent reporting. We strongly oppose any non-compliance.

What does it mean: Appropriate contribution of taxes is a core element of our corporate social responsibility. 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 implement end-to-end processes with a focus on tax compliance, taking into account a number of factors including reputation, social aspects, shareholder value along with economic and operational factors.

How do we do it: We comply with all relevant applicable tax regulations as well as filing, documentation, disclosures, and approval requirements worldwide where Bayer operates. Thus, we are able to contribute the amount of tax legally due in any jurisdiction in accordance with the rules set by the respective governments. Bayer’s total tax contribution provides essential revenues for governments needed for the fulfilment of their social, economic, and societal tasks.

Our Commitment: Bayer’s tax strategy follows business needs. We enable our businesses through efficient business models whereby profits are taxed in line with our global value chain, based on internationally agreed taxation principles.

What does it mean: In order to be competitive, our businesses need to flexibly adapt and be innovative with their products and go-to-market strategies. We work closely together and support implementing business models that are aligned with global value chains. We fully appreciate that jurisdictions need sufficient funding to manage the tasks and obligations towards the society. We do not engage in artificial transactions.

How do we do it: We apply the law as it exists in the respective jurisdictions, consider internationally agreed economic allocation of profits and taxing rights including the minimum tax standard under Pillar Two as introduced by the OECD.

Our Commitment: At Bayer, we are committed to being transparent and have a cooperative relationship with all relevant tax authorities.

What does it mean: We proactively anticipate and prepare all relevant documentation in a timely fashion of all tax matters globally and collaborate with tax authorities amongst others during tax audits.

How do we do it: In addition to our cooperative approach during tax audits, where appropriate, we may seek rulings and/or Mutual Agreement Procedures with authorities in order to obtain legal certainty. Where available we may 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.

Our Commitment: We support self-explanatory transparency in the right hands. At the same time, we need clear legislative standards to act on, that enable our business to further improve.

What does it mean: As Bayer, we seek common ground and strive for a trustworthy exchange with external stakeholders. Thoughtful dialogue is important to us. We are transparent about what we do, but also clearly express our demands in the public arena.

How do we do it: Bayer endeavors to be tax transparent at country level, EU level and globally as displayed on the following chart. As one of the first multinational companies, Bayer has adopted and published its ‘Approach to Tax’ on the corporate webpage. Beyond, Bayer has committed to publish its Country-by-Country report as mandated by EU regulations. Also, our business footprint in conjunction with our tax strategy is a constant part of conversations with media and other stakeholders interested in the space of ESG. We invite stakeholders to reach out and discuss with us in case of questions.

As the continuous further development of tax legislation is also in our interests, we participate in the political discourse while observing the stipulations of the Code of Conduct for Responsible Lobbying.

Our Commitment: Bayer’s Approach to Tax endeavors to manage and mitigate our tax risk with the help of efficient operation of the tax function.

What does it mean: To meet our tax obligations efficiently and effectively in every country in which we operate, we have set up and maintain appropriate Internal Control Systems and Tax Control Framework.

How do we do it: Tax risks are also routinely monitored as part of our internal compliance procedures to enable appropriate assessment and management. As an element of financial reporting, tax risks are also subject to regular review by the external auditor. When appropriate, we seek advice from third party advisors to support the decision-making process. In this connection, and observing legal requirements, Bayer separates corporate auditing from tax consulting to rule out conflicts of interest in advance. It is also a requirement for all Bayer tax professionals to have the necessary knowledge and qualifications and receive ongoing training to fulfill compliance requirements.

The below chart depicts the Tax Control Framework at the Bayer Group:

The Tax Control Framework provides accountability, responsibility and organization of the tax function as a whole and confirms that the Global Head of Tax is globally accountable and, jointly with regional and local tax experts, responsible for all taxes and tax effects relating to Bayer activities. The Global 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 (the Supervisory board).

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 Code of Conduct, as approved by the Bayer AG Board of Management.