Tax Management Policy
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|Version:||Date of Review:||History:|
|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.|
|4||04/23/2020||Updating Items I. Purpose, II. Scope; III. Guidelines – Subitems 2.1, 3.1, 3.1.1, 3.1.2, 3.3; IV. Management of Consequences and VI. Additional Documents.
Excluding Subitems 1.3 and 3.2.3.
Ensure that the tax management and strategy adopted by the Company adhere to prevailing laws, mainly employing adopting the most appropriate and efficient tax treatment on services rendering, other events and transactions made, which shall be based on the corporate values and principles, in the exercise of responsibility with public authorities, thus, contributing to Brazil’s social and economic growth.
All members of the Management (officers, members of the Board of Directors and members of the Advisory Committees), members of the Fiscal Council and employees of the companies Cielo S.A., Servinet Serviços Ltda., Aliança Pagamentos e Participações Ltda. and Stelo S.A., hereinafter (“Cielo” or “Company”). All the Company’s Subsidiaries must establish their directives based on the guidance provided in this Policy, considering the specific needs and legal and regulatory aspects to which they are subject. Regarding the Affiliated Companies, the Company’s representatives working in the Management of Affiliated Companies should make efforts to set their directives based on the guidance provided for in this Policy, considering the specific needs and legal and regulatory aspects to which they are subject.
1. Initial Provisions
1.1. Cielo S.A., acting as an 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 appropriation of taxes and delivery of ancillary obligations, always pursuing the adhesion to the prevailing laws and tax rules.a
1.2. 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, under 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.
1.3. All actions of Cielo pursue transparency, clarity, order, and consistency, aware of its responsibilities towards shareholders, employees, customers, consumers, and other stakeholders.
2.1. This Policy is guided by the following pillars, also provided for in our Code of Ethical Conduct:
2.1.1. Ethics: “Ethics in all relations” is one of Cielo’s values. The ethical conduct precepts are outlined in the Code of Ethical Conduct, 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 Policy shall be conducted with integrity and honesty, due diligence, and care.
2.1.3. Legality: Assurance of compliance with laws, the Bylaws, and all other rules and policies of Cielo. Thus, the tax appropriation 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 a 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 tax criteria, assessments, and appropriation. In pursuit of a transparent tax strategy, Cielo releases in Brazil every quarter, 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. Also, 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 always to 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. Tax Management and Mitigation of Tax Risks
3.1.1. Make a prudent and logical interpretation of the tax laws, aiming at implementing them under lawmaker’s intention and taking into consideration prevailing case laws, according to the economic, political, and social context, concerned with mitigating the legal tax risks.
3.1.2. Ensure the proper appropriation of taxes and the timely delivery of ancillary obligations, avoiding the incurrence of penalties and the accumulation of tax liabilities.
3.1.3. Set out internal controls ensuring that the information used in tax administration is reliable, complete, current, and auditable.
3.1.4. Execute tax strategies and structures that 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.
3.1.5. 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.
3.1.6. Referring to related party transactions, subject to the Transfer Price rules, these shall be calculated under the laws and regulations of each country or region where these transactions shall take place, also under the transfer price guidelines published by OECD, observing the arm’s length principle.
3.2. Relationship with the Tax Authorities
3.2.1. Establish good relations with the tax authorities, cooperating when necessary, and providing them with all information requested in a clear, accurate, and complete manner.
3.2.2. Participate in tax discussions jointly with business organizations and those promoted by tax authorities in the markets where it operates.
3.2.3. 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 to obtain benefits in taxation or decrease the tax burden.
3.3. Alignment with other Cielo’s policies
3.3.1. The tax strategy shall be subject to Cielo’s Code of Ethical Conduct, which is broadly disseminated to all employees and executives, and extensive to members of the Company’s governance bodies.
3.3.2. Cielo extends the guidelines mentioned above and the good tax practices to its supply chain, employing the Suppliers Code of Ethics and Conduct*.
3.3.3. Cielo provides training through Cielo University to all its employees 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 that may incur risks to its shareholders.
4.2. For the purposes of compliance with any inspection, the supporting documents of tax assessments and appropriations are safely kept, filed at the company’s headquarters.
Employees, suppliers, and other stakeholders that see any deviations from the guidelines of this Policy may report this deviation through the Ethics Channel (www.canaldeetica.com.br/cielo or 0800 775 0808), anonymously, if they so wish.
Internally, the non-compliance with the guidelines of this Policy leads to the application of measures of accountability of the agents that do not comply with it according to the respective severity of the non-compliance.
- Management 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 employing 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 Shareholders’ Meeting for proper measures.
VI. Additional Documentation
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 the 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 that provides a platform to compare economic policies, solve market issues, and coordinate domestic and international policies.
- Stakeholders: They represent all relevant stakeholders of the Company, or also, individuals or entities undertaking any type of direct or indirect risk with the company. Among others, the following stakeholders stand out: shareholders, investors, employees, society, customers, suppliers, creditors, governments and regulatory bodies, competitors, official press, users of electronic means of payment, and non-governmental organizations.
The Company’s Board of Directors is responsible for changing 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.