Our global tax principles are based on our approach to tax governance, the management of tax risks, tax compliance and reporting, and our relationship with tax authorities. We recognize that tax is an important element of our overall corporate social responsibility. These global tax principles apply to all Mastercard entities and majority-owned Mastercard affiliates. Newly acquired affiliates must conform their policies (or adopt this policy) no later than the first anniversary of the closing date of such acquisition.
The Global Tax Principles as well as the referenced tax policies are reviewed and approved by the Chief Financial Officer and the Executive Vice President, Tax.
Tax Governance
Tax is comprised of an integrated team of tax specialists that are led and managed by the Executive Vice President-Tax who reports to the Chief Financial Officer. The tax department’s key responsibilities include Tax Compliance, Tax Accounting & Reporting, Indirect Tax, Direct and Indirect Tax Audits, and Transfer Pricing.
Tax policies, strategies and exposures are overseen by and reported regularly to Mastercard’s Audit Committee. The Executive Vice President-Tax meets with the Audit Committee formally at least once a year to discuss tax issues that are relevant to the worldwide group. The annual presentation includes details of relevant global tax developments, tax audits, tax controversy and other relevant topics. This meeting will also be attended by the General Counsel and the external auditors.
Management of Tax Risks
It is the policy of Mastercard to ensure that Mastercard affiliates are compliant with the tax requirements of the jurisdictions (i.e., country, state, localities, etc.) where they are engaging in business transactions, as applicable.
This is managed by:
- ensuring employees handling tax are appropriately qualified and experienced
- processes and procedures that mitigate risk
- using external advisors for review
We strive to understand and limit the inherent risks of operating on an international stage. We implement tax management measures including controls over compliance processes and monitor their effectiveness. Prior to carrying out significant transactions, we consider the tax consequences and may consult with external advisors on the tax implications of a potential transaction based on an assessment of the risk presented by the transaction. We have processes in place to proactively identify, evaluate, manage, monitor, and reduce these risks on a regular basis. We manage tax risks by continuously monitoring relevant tax laws and any changes to those tax laws in the jurisdictions in which we operate. We maintain a global team of experienced tax professionals in each region, provide relevant training, and seek counsel from external tax advisors across the world. Our tax risk management is underpinned by a series of internal tax controls. These internal tax controls are organized around a set of policies and procedures focused on Tax Compliance, Tax Accounting & Reporting, Indirect Tax, Direct and Indirect Tax Audits, and Transfer Pricing.
- Tax risk appetite and attitude to planning
Mastercard’s Board of Directors actively oversees the company’s risk and risk management practices, focused on fostering a risk-aware culture while encouraging thoughtful risk taking.
It is our stated policy and tax principle that we will never create a nominal presence in a particular jurisdiction simply to take advantage of a low tax rate. Any tax planning is based on reasonable interpretation of applicable tax law with due consideration and is aligned with the substance of the economic and commercial activity of our business.
- Tax compliance and reporting risk
Mastercard is committed to complying with applicable tax laws and regulations in the countries and territories in which we operate, while also maintaining effective relationships with tax authorities and regulators. Accordingly, corporate income and franchise tax returns, non-income tax returns, and indirect tax returns filed by Mastercard are prepared and filed by the due date as required by local tax laws and regulations.
- Changes in tax legislation
Mastercard actively monitors new tax legislation and any changes of interpretation of existing legislation as part of the computation of its estimated effective tax rate and through the operation of its internal controls over financial reporting throughout the year. Mastercard will seek external assistance from professional advisors and clarification from tax authorities when necessary and appropriate.
- Tax Accounting and Reporting
We design and implement processes and controls to ensure accurate, complete, and timely compliance with various aspects of financial tax accounting and reporting standards as they relate to income taxes.
- Reputational risk
We have adopted a Code of Conduct and other internal policies and guidelines to support our values and goals, as well as comply with the laws, rules and regulations that govern our business operations. This Code applies to all directors, officers, and employees of Mastercard.
In addition, we have a Supplemental Code of Ethics applicable to senior officers. These include the President and CEO, the Chief Financial Officer, the Controller, and others from the US Parent company, including those who serve in financial accounting, treasury, tax and legal advisory roles.
The Audit Committee monitors compliance with the Code, the Supplemental Code of Ethics and other internal policies and guidelines, based on management reports.
We believe, as affirmed by our Code of Conduct that “acting ethically and responsibly is not only the right thing to do, but also the right way to do business.” This applies to our employees around the world. Abiding by the standards and procedures outlined in the Code and related policies is a condition of continued employment with the Company.
- Cross-border & transaction risk
Mastercard affiliates engage in intercompany transactions on an arm’s length basis and in accordance with OECD principles or local requirements in the respective territories where Mastercard and its affiliates conduct business.
All transactions and tax positions require both economic substance and business purpose in order to be approved and implemented. Accordingly, Mastercard pays taxes in jurisdictions where it maintains business operations and employs people, taking into account where value is created and where appropriate economic activities are performed.
We do not maintain a nominal presence in any jurisdiction simply for the purpose of taking advantage of a low statutory tax rate.
- Merger & Acquisition risk
The Merger & Acquisitions team involves the tax team from the beginning of any project. The tax team is involved in any necessary tax due diligence and the overall deal process. Furthermore, tax is an integral workstream in any integration process. No entities are disposed of or liquidated without the involvement of the tax team.
Relationship with Tax Authorities
Mastercard engages with tax authorities with honesty, integrity, respect, and fairness. We regularly communicate with tax authorities, and when appropriate, proactively may seek advance tax rulings and pursue mutual agreement procedures. We seek to work openly and efficiently to resolve tax controversy matters through proactive discussion and negotiation with tax authorities.
