The Cemex approach to tax
Cemex worldwide group is a global building materials provider with a presence in more than 50 countries. Cemex started as a local cement producer in Mexico in 1906 and the headquarters remain there today. The worldwide group is listed on New York stock exchange.
In the UK the principal Cemex trading company is Cemex UK Operations Ltd. Its core operations are the extraction, processing and distribution of building materials (cement, concrete and aggregates) across the UK. The nature of our trade means that in operational respects it only carries out local transactions rather than cross border.
Following changes in the law requiring companies such as ours to set out their tax strategy, Cemex welcomes the opportunity to explain our approach to tax management.
The Cemex group of companies in the UK prides itself on its transparent and collaborative relationship with the UK tax authorities. We work hard to ensure that our practices are fair and robust so that the direct and indirect taxes we pay as a company and employer are right, paid at the right time and in compliance with the legislation, international treaties and OECD guidelines.
The CEMEX tax strategy has been reviewed and remains applicable for the year ended 31st December 2019.
To be able to calculate the right amount of tax we need robust and reliable financial information. At Cemex we devote a lot of time and resources into ensuring that this is so.
The Cemex worldwide group is listed on the Mexican Stock Exchange (Bolsa Mexicana de Valores - BVM) and on the New York stock exchange (NYSE). As a result of being listed on the NYSE, Cemex is required to comply with the Sarbanes Oxley Act 2002. Therefore, in addition to the usual UK accounting and auditing standards applicable to all companies, the Cemex group is held to an additional and arguably higher standard in its accounting processes and controls than most other UK companies because of the need to conform to the Sarbanes Oxley Act. This gives additional confidence in the accuracy of the data which is used by the tax team to complete their tax returns.
Our Senior Accounting Officer (per Sch 46 Finance Act 2009) in the UK oversees the general finance function, its controls and compliance with them, and reports to the UK Board. Compliance with accounting controls is rigorously tested by the local internal control team, then by the central internal control team reporting to the Board in Mexico, and also by external independent auditors.
The approach by Cemex is to draw on the knowledge of both its in-house tax team and also external tax experts.
The efficiency and expertise of our in-house tax team is ensured through availability to resources, training, systems and continuous professional development.
Reviews of tax risk start at the ground level with the local in-house tax team who are appropriately qualified and experienced in tax whenever new and significant transactions are made by the business to evaluate what tax risk, if any, there is.
When appropriate, the reviews continue up to regional level with the Regional Head of Tax and then on to a very senior level with the Senior Vice President of Tax reporting directly to the Board.
Therefore risk is assessed and managed both on a local and, when appropriate, international level.
Cemex does make use of the incentives and initiatives that the UK parliament intended companies to have in order to minimise the tax burden for our shareholders. For example, the UK government encourages companies such as ours to spend money on environmentally friendly plant and machinery by affording us certain tax breaks.
Where the intention of parliament is not clear we seek appropriate advice as to interpretation and we would never knowingly contravene the intention of parliament.
Cemex has established a transfer pricing policy for all its local and cross border transactions with related parties. This policy is governed by the arms length principles set by UK rules and OECD guidelines.
In the course of our business, when structuring our commercial activities and investments, we consider, among other business and legal factors, the tax impacts and make sure they will have commercial and economic substance and they will have regard to the potential impact on our reputation and broader goals. We will not undertake commercial and investment planning that is contrived or artificial to tax.
We strive to achieve the best possible tax risk rating at our annual risk review with HMRC.
Given the scale of our business and volume of tax obligations, risks will inevitably arise from time to time in relation to the interpretation of tax law and nature of our compliance arrangements.
We proactively seek to identify, evaluate, manage and monitor these risks to ensure they remain in line with the group’s tax risk appetite. Where there is significant uncertainty or complexity in relation to a risk, external advice may be sought.
Cemex is proud of its cooperative and collaborative relationship with HMRC. Cemex does its utmost to keep HMRC informed on a real time basis of significant transactions and events. Should an error be discovered in tax workings HMRC is informed promptly. Should HMRC open an enquiry into any element of our tax compliance we ensure that all information is presented in a timely manner.
We engage with tax authorities, including HMRC, with honesty, integrity, respect and fairness and in a spirit of co-operative compliance. We are prepared to litigate where we disagree with a ruling or decision of a tax authority, but will first seek to resolve any disputed matters through pro-active and transparent discussion and negotiation.
Cemex considers that an open and honest relationship with HMRC is key to its business success.
This tax strategy is aligned with our Ethics Code (available on Cemex.com).
This publication of this policy is approved by the VP of Tax for Cemex Worldwide and the Board of Directors of the Cemex UK group as complying with para. 19(2) of Sch 19 Finance Act 2016.
This policy applies to all UK taxes assessed on Cemex entities under the scope of the legislation.