Cisco Global Tax Strategy
Cisco recognizes it has a responsibility to contribute and work in
partnership with the communities and places in which it has operations.
Such responsibility includes ensuring that Cisco pays tax on the
appropriate level of profits generated from the activities undertaken
in each jurisdiction.
i) Approach to Tax
Cisco complies with applicable tax laws, treaties, regulations, and
other tax guidance. Cisco follows applicable tax laws, treaties,
regulations, and other tax guidance to ensure that each Cisco entity
reports the appropriate profit based on their respective functions
performed, assets used, and risks assumed.
ii)
Approach to risk management and governance in relation to taxation
Cisco employs a global staff that consists of qualified and competent
tax professionals with the appropriate experience, expertise, and
education in taxation to identify and manage potential tax risks. Cisco
invests in ongoing technical tax and general business training and
development of its employees. All Cisco tax compliance is undertaken
with appropriate diligence and technical expertise. We obtain advice
from external advisors to supplement our internal expertise or
resources, as appropriate.
Our management of specific tax risks includes:
a.
Use of a framework to globally analyze and review uncertain tax
positions and tax contingencies on a periodic basis under applicable
accounting standards. These tax risks are revalidated each quarter
under the supervision and review of our external auditors;
b.
Continuous monitoring and analyzing domestic and international tax
legislation, case law, guidance, and practice;
c.
Ongoing review and refinement of the policies and procedures supporting
tax compliance;
and
d.
Regular training of our employees to ensure that our tax decisions and
compliance activities are conducted accurately with the appropriate
level of expertise and oversight.
In addition, Cisco employees are trained on the importance of
compliance and Cisco’s compliance framework to ensure that Cisco
remains compliant in all areas. This framework is designed to detect
and evaluate compliance issues and take the appropriate action. We
reinforce our ‘Keep Cisco Compliant’ culture through the roles of
specialist compliance functions and a strong internal audit function.
Cisco’s taxation is the responsibility of Cisco management with
oversight by the Cisco Systems, Inc. Board of Directors (ultimate
parent of the group). The Board has two committees to assist with that
oversight: (1) a Finance Committee which reviews liquidity and capital
structure, and (2) an Audit Committee, which reviews financial
information which will be provided to the shareholders and others;
reviews the systems of internal controls which management and the
Board of Directors have established; reviews Cisco’s financial and risk
management policies; and oversees Cisco’s accounting and financial
reporting processes and the audits of Cisco’s financial statements. As part
of these Committees’ responsibilities they review items relating to Cisco’s
taxation. The senior leadership team of the Global Tax and Customs
department regularly informs the Finance and Audit Committees so that they
are effectively able to fulfill their duties.
The boards of directors of all Cisco companies within the Cisco group are
responsible for the oversight of the financial policies and risk management
for their legal entities, including with respect to tax. The Tax department
personnel responsible for a particular legal entity’s tax matters regularly
inform the statutory directors of the legal entity as to tax compliance
matters to enable them to effectively fulfill their duties.
iii) Attitude towards tax planning
We undertake appropriate tax planning, consistent with tax laws and
principles, and aligned to
Cisco’s business and operations.
We utilize tax incentives that are appropriate to Cisco’s business and are
consistent with the policies and goals of the organization offering such
incentives. To the extent Cisco obtains an incentive, we fully comply with
the requirements of such incentives.
We obtain advice from external advisors to supplement our internal
expertise and resources, as appropriate.
iv)
Level of risk in relation to taxation that Cisco is prepared to accept
Cisco does not enter into transactions that have no commercial rationale or
carry legal or reputational risks to our relationships with tax
authorities, our customers, or the wider communities in which we operate.
Cisco only takes tax positions that are reasonable and defensible under the
tax law. Cisco prepares its tax returns in compliance with applicable tax
laws. In instances in which the tax treatment of an issue is not settled,
Cisco takes a reasonable and defensible position within the law. Cisco’s
tax returns in most countries are regularly examined by tax authorities. In
those examinations, the company always seeks to maintain open and
cooperative relationships with tax authorities. Tax risks may exist if tax
authorities do not agree with the company’s position.
v) Approach towards dealings with tax authorities
Cisco acts with integrity at all times. We place great importance on
preserving our positive reputation with governments, regulatory bodies,
customers, and other stakeholders globally. Accordingly, Cisco interacts
with the tax authorities in a transparent and honest manner. This includes
compliance, audit defense, Advance Pricing Agreements, disclosures, and
documentation. In addition, Cisco proactively engages with tax authorities
on areas of uncertainty and acts in good faith throughout these
discussions.