The taxes AXA pays are an important part of its wider economic and social impact and play a key role in the development of countries where it operates*. AXA regards it as a critical element of its commitment to grow in a sustainable, responsible and socially inclusive way.
AXA also squares its responsibilities as a co-operative, compliant taxpayer in each and every country in which it operates, with the need to support competitive business growth - serving all its stakeholders including investors, suppliers and employees.
Tax aspects in relation to AXA as a multinational company
The AXA Group’s approach to tax issues
In the countries where it operates, AXA is both a tax payer and a tax collector, given that many specific taxes are levied on insurance policies and collected from our customers as part of the insurance and Asset Management revenues while others are remitted to the various state and federal administrations around the world. AXA is seeking good relationships with tax authorities and acts as a reliable partner towards them.
The tax function is organized within the Group to ensure full compliance with all tax legislation, including transfer pricing legislations and requirements, in the countries where AXA operates. In addition to the Group Tax Department based in France, all key operational entities/countries/geographic zones have a tax team in charge of ensuring that tax regulations are well understood and satisfied by the entities. A Tax Code of Ethics, agreed between Group Tax Department and local tax teams, highlights the key principles** guiding the actions of the various tax teams. The satisfaction of this Code of Ethics is a prerequisite of the activities performed by all AXA tax teams. In this respect, a bi-annual tax review process of each key entity or business line is performed by the Group Tax Department in connection with each local team. In addition, an International Tax Committee composed of various senior tax executives within AXA tax teams meets every quarter to ensure consistency in approach on some technical topics, as well as agreements on guidelines connected to specific items. As an example, the International Tax Committee issued internal guidelines around investments funds which provides for a set of rules that any fund within AXA must comply with (rationale of the state of domiciliation, prohibition of domiciliation within non-cooperative jurisdictions, commercial purpose). In addition, an International Tax Committee composed of various senior tax executives within AXA tax teams meets every quarter to ensure consistency in approach on some technical topics, as well as agreements on guidelines connected to specific items. As an example, the International Tax Committee issued internal guidelines around investments funds which provides for a set of rules that any fund within AXA must comply with (rationale of the state of domiciliation, prohibition of domiciliation within non-cooperative jurisdictions, commercial purpose). In addition, for any fund located within a low tax jurisdiction, one of the key principles is that the asset management fee must be taxed in the country where the management team is located and therefore where the service is provided.
As an international group operating in several countries, the AXA Group is subject to various tax regimes and regulations and takes into account any changes in tax law. AXA is specifically vigilant about the changes that could result in higher tax expenses and payments, higher compliance costs or that may affect the AXA Group’s tax liability, return on investments and business operations. In particular, please see the paragraph “Changes in tax laws or uncertainties in the interpretation of certain tax laws may result in adverse consequences on our business and our results of operations” in Section 4.1 “Risk Factors” of the Annual Report.
When considering how AXA entities structure commercial arrangements, tax implications are analyzed in parallel with other consequences such as capital efficiency and legal and regulatory aspects when deciding between potential alternative arrangements.
The Group’s procedures and policies regarding business activities with or in a country that may qualify as "tax havens" or subject to international sanctions, embargoes or any other situation in which the risks, including corruption, are very high , have been formalized by the Group Compliance Department in the AXA Group " Sanctions policy" of March 2015.
AXA has no licensed insurance or operating business activities in the countries specifically identified as non-cooperative jurisdictions*** under French domestic tax rules, except in Panama. In this country, which has been recently identified as such, AXA has been acting locally for several years through two operating companies providing assistance services to local customers or travelers insured by AXA.
AXA’s tax contribution by main geographical regional locations
Profit (Loss) Before Income Tax (IFRS) in 2017
Income Tax Paid (on Cash basis) in 2017
|Continent||Profit (Loss) Before Income Tax (IFRS) in 2017 (K€)||Income Tax Paid (on Cash basis) in 2017 (K€)|
|Europe||4 581 749||1 065 273|
|Australia||6 259||4 517|
|Americas||1 440 775||52 383|
|Africa||43 557||13 371|
|Asia||1 348 302||181 993|
|Total||7 420 643||1 317 537|
Disclosure on tax matters and information on taxes connected with the Group’s activities in each country
The consolidated financial statements are prepared in compliance with IFRS standards (as disclosed in Note 1 “Accounting principles” in Part 5 – “Consolidated Financial Statements” of this Annual Report). Accounting for income taxes recognizes both the current tax consequences of transactions and events and the future tax consequences of the future recovery or settlement of the carrying amount of the entity’s assets and liabilities, as required by IAS 12 (see Note 1.17.1 “Income taxes” in Part 5 – “Consolidated Financial Statements” of this Annual Report).
The Consolidated Financial Statements present the reconciliation between the theoretical tax charge and the effective tax charge under IFRS. All differences are fully explained (see Note 19 “Tax” in Part 5 – “Consolidated Financial Statements” of this Annual Report). It should be noted that in many jurisdictions where AXA operates, the income and capital gains on savings-products benefit from a favorable tax treatment, also when such products are included in life insurance products. This leads to a lower effective tax rate for life insurance companies. Over the last several years, and notably following the financial crisis, this difference has trended down.
In addition to the details reported around the Group effective tax rate, AXA reports substantial information on the impacts of any change in local tax regulations on its business, as well as details of the tax burden per line of business and per country. AXA’s income tax expenses/benefits are extensively disclosed in the Annual Report and are broken down by business segment and country. For each, a dedicated paragraph provides a comment about the line related to Tax Income (see Section 2.3 “Activity Report – Underlying earnings, Adjusted earnings and Net Income Group share” of this Annual Report).
Tax aspects of activities and products offered by the group
Activities of the Group
The Group’s activities are subject to strict regulations and rigorous control in each territory in which AXA operates. In addition to these regulations, AXA has developed a set of detailed internal standards that applies to all Group entities that are managed or controlled by AXA, regardless of the activities undertaken by the entity or its ownership structure.
According to these internal standards, CEOs must ensure that staff are fully conversant, and comply with applicable laws, mandatory Codes of Conduct, rules and regulations (including applicable tax laws and regulations) relevant to their area of operations.
This means that local senior management must appreciate the tax implications of the activities in their entity. The main considerations are:
- compliance with the taxation of employees in the territory in which they are employed;
- compliance with the taxation of business undertaken in the territory (including levies and sales taxes); and
- cross-border tax issues, including transfer pricing aspects.
A specific focus on transfer pricing items is done in application of these standards. In particular, Chief Financial Officers must ensure that (re)insurance policies entered into represent a true transfer of risk and that their status as (re)insurance contracts could not be subject to challenge. Business between Group companies must be transacted at market prices where a market price exists, or in the absence of market prices, must be supported by formally documented justification for the charge made. Within AXA Group, the cross-border flows reflect the reality of the services and where the value is created within the operational activities. There is no internal policy aiming at transferring value to low tax jurisdictions, and AXA is not using artificial structures or contracts to locate income within low tax jurisdictions.
Products offered by the Group
AXA products are not designed to allow or encourage tax evasion. The Group has set up a validation framework to ensure that new products undergo a thorough approval process before they go to market.
The local decision to launch a new product must result from a documented approval process that complies with the AXA Group’s standards in terms of product features, pricing, asset-liability management and aspects related to legal, compliance, regulatory, accounting and reputation.
Moreover, AXA has established strict policies regarding its cross-border activities and knowledge of its customers, in order to ensure that our products and services are not misused for money laundering or tax evasion purposes and are governed by specific rules according to which cross-border life insurance proposals must be presented to the Group Tax and Compliance Departments for validation.
While all Group entities must in any case comply with local regulation, the Group Tax Department can veto a product if this product is not compliant with internal rules.