4 _273 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 4 NON-FINANCIAL STATEMENT Sustainable Development Report A recurring effective tax rate of close to 20% and the lack of any tax adjustments or convictions for tax fraud attest to the effectiveness of the initiatives and tax governance in place to combat tax evasion. Furthermore, the Group’s presence in a given geography is based solely on operational decisions concerning our manufacturing or marketing operations and never on tax considerations. To ensure the consistent deployment of key tax policy measures, in 2023, the Group created the position of Executive Vice President, Tax Governance, who during this first year primarily focused on: ● reminding everyone to comply with best tax practices consistently across the Group; ● helping to improve the security of worldwide intra-Group transactions, in particular by deploying the transfer pricing policy. Tax risk management policies are based on: ● a transfer pricing policy deployed in accordance with the latest OECD guidelines, with compensation of Group units determined on an arm’s length basis, with fair compensation for key functions; ● application of the transfer pricing policy across the entire Group, with understandable, transparent information systematically provided as requested by the local tax authorities; ● protection of shareholder value by implementing a full range of procedures to mitigate the risk of double taxation of profits, involving the use of all forms of recourse, as necessary, including internal recourse, governing authorities and arbitration; ● the assurance that all of the tax positions taken are consistent with the Group’s core values, including respect for facts, the environment and people; ● a preference for solutions that avoid unnecessarily complex tax analyses, to reduce the risk of divergent interpretations that may lead to tax disputes, while improving transparency. All tax risks are tracked specifically by the Tax Affairs Department, under the supervision of the Corporate Finance Department. The system for managing these risks is also governed by the Group’s tax policies. In line with its new obligations, the Group is deploying and tracking compliance with the global minimum taxation rules issued by the OECD’s Pillar Two initiative. Lastly, in addition to these tax evasion mitigation measures, the Group is preparing a tax transparency report for publication in 2024, which will make its tax-related information even more accessible by presenting its worldwide tax position with respect to 2023. 4.1.4.2 Demonstrating our CSR commitments through responsible procurement policies SDG 2.3, 2.4, 8.4, 10.1, 12.6, 12.8, 15.2 and 15.5. The primary conduit for expressing Michelin’s social responsibility commitments to suppliers is the Purchasing Department. Its mission is to guarantee the availability of products and services the Group needs by selecting suppliers that meet not only our quality, cost, deadline and reliability standards, but also our expectations concerning social and environmental issues. The teams are guided by the Group’s Code of Ethics, while making sure that the duty of care is properly exercised. At around €16 billion in 2023, purchases represented close to 60% of consolidated sales for the year. Risk factors Among other objectives, the Responsible Purchasing policy is designed to mitigate the impact of the following risks: ● supplier failure to respect human rights; ● the climate change impact of our suppliers(1); ● impact of our raw materials on the environment; ● non-compliance with the Supplier Relations Code of Conduct. (1) See section 4.1.1 The Environment.
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