Tax Management Policy

Review History

Version: Date of Review: History: 
1 05/15/2015 Document Elaboration.
2 05/06/2016 Update of items Purpose (I), Additional Documentation (VI), Concepts and Acronyms (VII), Responsibilities (V), Guidelines (III) and Outcome Management (IV). Inclusion of item Miscellaneous (VIII).
3 05/08/2018 Change of title from “Tax” to “Tax Management”; Update of the entire content of the policy pursuant to the Company’s current practices.

 

I. Purpose
Ensure that the tax management and strategy adopted by the Company adhere to prevailing laws, mainly by means of adopting the most appropriate and efficient tax treatment on services rendering, other events and transactions made, which shall be based on the exercise of responsibility with public authorities, thus, contributing to Brazil’s social and economic growth and guided by Cielo’s sustainable development pillars.

II. Scope
All Management (officers, statutory or not, members of the Board of Directors, members of the Fiscal Council, members of the Advisory Committees and other managers) and employees of Cielo S.A. and its subsidiaries.

III. Guidelines
1. Initial Provisions
1.1. Cielo S.A., acting as employer, stimulating the economic and social development, and as a company which interacts with community and authorities of the countries where it operates, is aware of being responsible towards public authorities, which is translated from the adequate and efficient treatment of the tax practices to the proper payment of taxes and delivery of ancillary obligations, always pursuing the adhesion to the prevailing laws and tax rules.
1.2. All actions of Cielo pursue transparency, clarity, order, and consistency, aware of its responsibilities towards shareholders, employees, customers, consumers and other stakeholders.
1.3. This Policy, grounded on its mission, principles and corporate values, aims at ensuring the exercise of the Company’s responsibility towards public tax authorities, contributing for the social and economic development of the countries where it is located, and the strict compliance with laws.
2. Pillars
2.1. This Policy is guided by the following pillars, also provided for in our Code of Ethics:
2.1.1. Ethics: “Ethics in all relations” is one of Cielo’s values. The ethical conduct precepts are set forth in the Code of Ethics which defines employees’ desired behavior, inclusive referring to a relationship with the tax authorities.
2.1.2. Honesty and good faith: All the duties performed in the area covered by this Tax Policy shall be conducted with integrity and honesty, with due diligence and carefully.
2.1.3. Legality: Assurance of compliance with laws, the Bylaws and all other rules and policies of Cielo. Thus, the tax payment shall be made in compliance with prevailing tax laws.
2.1.4. Responsibility and Corporate Citizenship: Cielo strictly observes its tax liabilities in the exercise of its rights. Cielo does not adopt illegal tax strategies and stratagems to decrease its tax burden, always aiming at fulfilling its role as Brazilian corporate citizen and taxpayer. Cielo is clearly aware of the social and economic roles that tax payment represents for society.
2.1.5. Transparency: Cielo foments transparency and dialogue across its value chain, inclusive referring to criteria, assessments and tax payment. In pursuit of a transparent tax strategy, Cielo releases in Brazil on a quarterly basis, tax issues significantly impacting the financial statements of the Company and its subsidiaries. Amongst the information released, we point out new tax approaches, the breakdown of tax impacts, revenue and operating income and statements of effective tax rates, always considering the best accounting practices and the standards required by IFRS and COSIF.
2.1.6. Reputation: Cielo looks after is reputation before tax and administrative authorities with an open and constructive dialogue by providing information on the facts and circumstances when required. In addition, all the strategies adopted shall take into account the following requirements: low risk to the company’s reputation and preservation of brand value. Thus, Cielo invests in its brand valuation, its image on the domestic and international markets and seeks to always adopt the best tax practices, aiming the maintenance of its reputation with stakeholders and Cielo’s sustainability.
2.1.7. Governance: The tax issues relevant for the Company, whether due to financial risk or brand exposure, are informed to the Board of Directors or one of its advisory committees, which act as “guardians” of Cielo’s assets, also, ensure long-lasting relations with shareholders, taking into account the stakeholders’ interests.
3. Tax Strategies
3.1. Optimization of the Tax Burden
3.1.1. Cielo monitors the Brazilian and international tax scenarios in pursuit of tax optimization, in compliance with a sustainable tax management policy which represents the business continuity, in accordance with the strategies previously defined by the Company, always in strict legality. It is worth mentioning that the strategies adopted by Cielo take into account the mitigation of risks to the company’s reputation and brand preservation.
3.1.2. Cielo seeks to appropriately and efficiently adopt legal measures to reduce the tax burden aiming the maximization of value to shareholders, and whenever necessary will make use of legal opinions to justify its performance. Therefore, the Company will not take any measure to pose risks of being considered or interpreted as tax evasion by regulators.
3.2. Tax Management and Mitigation of Tax Risks
3.2.1. Set out internal controls ensuring that the information used in tax administration are reliable, complete, current and auditable.
3.2.2. Execute tax strategies, figures, and structures which observe the laws and the good business practices, such as the utilization of tax benefits conferred by laws, not representing legal and/or financial risk, as well as risk to Cielo’s reputation.
3.2.3. Make a prudent and logic interpretation of the tax laws, aiming at implementing them in accordance with lawmaker’s intention and taking into consideration prevailing case laws, according to the economic, political and social context, concerned with mitigating the tax legal risks.
3.2.4. The stakeholder relationship shall be guided by good businesses and tax practices, repealing artificial methods without economic purpose, neither providing benefits nor stimulating the obtainment of illegal decrease of the tax burden.
3.2.5. Referring to related party transactions, subject to the Transfer Price rules, these shall be calculated pursuant to the laws and regulations of each country or region where these transactions shall take place, also in accordance with the transfer price guidelines published by OECD, observing the arm’s length principle.
3.3. Relationship with the Tax Authorities
3.3.1. Establish good relations with the tax authorities, cooperating when necessary and providing them with all information requested, in a clear, accurate and complete manner.
3.3.2. Participate in tax discussions jointly with business organizations and those promoted by tax authorities in the markets where it operates.
3.3.3. Cielo does not accept any form of corruption in businesses and seeks this same commitment in its value chain. Thus, employees or executives of Cielo are oriented to neither offer nor accept bribery for the purposes of obtaining benefits in taxation or to decrease the tax burden.
3.4. Alignment with other Cielo’s policies
3.4.1. The tax strategy shall be subject to Cielo’s Code of Ethics, which is broadly disseminated to all employees and executives, and extensive to members of the Company’s governance bodies.
3.4.2. Cielo extends the guidelines mentioned above and the good tax practices to its supply chain, by means of the Suppliers Code of Ethics and Conduct.
3.4.3. Cielo provides training through Cielo University to all its employees in order to disseminate this policy’s pillars.
4. Inspection and Audit
4.1. The main tax processes are periodically reviewed by Cielo’s Internal Audit and independent auditors or external expert consultants biannually, thus, ensuring that Cielo does not support aggressive or evasive tax policies which may incur in risks to its shareholders.
4.2. For the purposes of compliance with any inspection, the supporting documents of tax assessments and payments are safekept, filed at the company’s headquarters.

IV.Outcome Management
Employees, suppliers, and other stakeholders who notice any deviation to this Policy’s guidelines may report the fact to the Ethics Channel (www.canaldeetica.com.br/cielo or 0800 775 0808), anonymously or not.
Internally, the failure to comply with this Policy’s guidelines implies the application of measures for agents’ liability who fail to comply therewith, according to the respective seriousness of such non-compliance.

V. Responsibilities

  • Managers and employees: Observe and ensure the compliance with this Policy, and whenever necessary, prompt the legal department and/or tax management for consultation on situations involving conflict with this ruling or by means of the occurrence of the situations described therein.
  • Vice President of Finance and Tax Management: They are liable for proposing the restatement of this Policy regarding the internal and external public, seeking the alignment with the best market practices, as well as the compliance with the guidelines set forth herein and the clarification of doubts referring thereto and prevailing tax laws.
  • Board of Directors: Approve this Policy, its reviews, and guarantee mechanisms to ensure its compliance.
  • Fiscal Council: Oversee the Management’s acts, besides checking the due compliance with legal and statutory duties, where applicable, to denounce them to the Management’s bodies. In case the Fiscal Council does not take reasonable measures, the issues shall be forwarded to the General Meeting for proper measures.

VI. Additional Documentation

  • Code of Ethics
  • Suppliers Code of Ethics and Conduct
  • Bylaws

VII. Concepts and Acronyms

  • COSIF (Chart of Accounts of Brazilian National Financial System Institutions): It represents the accounting criteria and procedures to be observed by financial institutions and other institutions authorized to operate by Brazilian Central Bank, as well as the structure of accounts and documents templates.
  • IFRS (International Financial Reporting Standards): These correspond to the international financial reporting standards issued by the International Accounting Standards Board – IASB.
  • OECD (Organization for Economic Cooperation and Development): an International organization which provides a platform to compare economic policies, solves market issues and coordinate domestic and international policies.
  • Stakeholders: Relevant parties interested in the Company, or also, individuals or entities assuming any type of direct or indirect risk with the Company, amongst others we point out: shareholders, investors, employees, community, customers, suppliers, creditors, governments and regulators, competitors, press, associations and professional associations, users of electronic means of payment and non-governmental organizations.

VIII. Miscellaneous
It shall be incumbent upon the Company’s Board of Directors to amend this Policy whenever necessary.
This Policy takes effect on the date of its approval by the Board of Directors and revokes any contrary rules and procedures.