Li & Fung Group – UK Tax Strategy
Li & Fung Limited and its affiliates (“Li & Fung” or the “Group”) specialises in the management of global supply chain and logistics solutions for brands and retailers around the world. The customers of the Group include department stores, hypermarkets, specialty stores and chain shops located globally.
This tax strategy document is published in accordance with Schedule 19 of the UK Finance Act 2016 by LF Europe Limited in respect of all the UK entities within the Group (“UK Group”). This document has been approved by the directors of the UK Group on 18 November 2019 and will be reviewed and where necessary, updated, on an annual basis.
Approach to Tax and Tax Governance
Li & Fung’s approach to tax is based on compliance with our reporting requirements and adherence with the relevant tax laws and regulations to pay the correct amount of tax, making use of government offered reliefs where applicable, with a view to deliver value to our shareholders.
The following covers the UK Group’s (A) Governance towards compliance and reporting (B) Attitude/approach towards tax planning and risk management and (C) Approach towards working with HMRC.
Governance towards Compliance & Reporting
In accordance with Li & Fung’s Code of Conduct and Business Ethics, employees are required to ensure all transactions are properly included in the books and records. All accounting information must be reliable so that it can be used for preparation of financial statements, statutory audit and other compliance purposes.
As a major subdivision of a Hong Kong listed company, the UK Group are well aware of the importance of compliance with the relevant tax laws, obligations and tax practices regarding the tax filing and payment of taxes. The Board and Audit Committee are kept up to date on a timely basis as regards legislative changes and any significant tax risks. The Group Tax team in Hong Kong’s headquarter, comprised of experienced tax professionals, has overall responsibility for tax within the Group.
The UK Group engages with professional tax advisors to ensure tax compliance. In addition to Li & Fung’s own research and training, Li & Fung maintains relationships with its professional advisors to ensure the UK Group are kept fully informed of the latest development of tax regulations and to ensure all transactions, as well as tax returns, are compliant with the relevant laws and regulations.
The UK Group’s Attitude/Approach towards Tax Planning and Risk Management
Li & Fung believes in a principled approach to tax planning. Business structures and transactions are undertaken to reflect the commercial requirements and cater to the operational needs of the Group.
As the Group has strict governance on compliance and reporting, the UK Group is not permitted to take material tax risks or expose the Group to uncertain tax positions. As such, whenever the UK Group deals with any significant transactions or when they experience uncertain tax positions, the UK Group seeks advice from professional tax advisors and obtains consent from the Group Tax team in Hong Kong’s headquarter.
In response to the Base Erosion and Profit Shifting (“BEPS”) project launched by the Organization for Economic Co-operation and Development / G20, our in-house tax experts and profession tax advisors are working closely on aligning our processes and practices to ensure compliance with the new requirements under the BEPS.
The UK Group’s Approach towards Working with HMRC
The UK Group seeks to maintain an open and honest relationship with HMRC taking a proactive approach to engage with them where considered appropriate.
Where there is uncertainty in the interpretation of tax regulations and other questions relating to current tax practices, the UK Group take advice from professional advisors, and where appropriate, seek advice from HMRC to gain certainty on the approach taken.