London Stock Exchange - Tax Strategy

1 - Introduction
1.1 Context

This document sets out the strategic tax objectives for London Stock Exchange Group plc and its group undertakings (‘LSEG’ or ‘the Group’).

While individuals and companies have legal obligations to pay tax, those obligations do not, however, extend to paying more than the amount legally required. Companies also have a legal obligation to act in the interests of their shareholders.

Please note that this document is not designed to be an operational manual with detailed instructions on the execution of tax processes. Development and definition of the governance framework and operating procedures which are required to support delivery of the strategic tax objectives are set out in a separate tax governance policy.

1.2 Ownership and approval

This strategy is owned by the Group Chief Financial Officer.

1.3 Scope

Generally the tax strategy and strategic objectives are intended to establish a clear and unequivocal approach to all aspects of tax reporting and compliance wherever the company operates.

The tax strategy supports the Group strategy and is focused on ensuring that taxes (and tax risks) are managed to provide sustainable outcomes within the parameters of the Group’s strategic and commercial objectives, and that all tax obligations are complied with in all countries in which the Group operates.

More specifically, in line with the LSEG corporate social responsibility statement, for companies where LSEG holds 50% or more of the share capital, we expect each company to develop and implement detailed policies and procedures that enable these standards to be met, and that reflect the specific character and requirements of their businesses and the environment in which they operate. The same detailed polices and procedures are encouraged where LSEG owns less than 50%.

This strategy applies to:-

A – Taxes payable and reportable including:-

  • Corporate income taxes (including withholding taxes)
  • Indirect taxes
  • Employment taxes payable and reportable to fiscal authorities
  • Stamp taxes
  • National Building Tax
  • Customs and Excise duties

B – Tax reporting activities including:-

  • Tax financial reporting
  • Tax forecasting
2 - Tax Strategy
2.1 High level overview

London Stock Exchange Group is a diversified international market infrastructure and capital markets business sitting at the heart of the world's financial community. The Group can trace its history back to 1698.

The Group operates a broad range of international equity, bond and derivatives markets, including London Stock Exchange; Borsa Italiana; MTS, Europe's leading fixed income market; and Turquoise, a pan-European equities MTF. It is also home to one of the world’s leading growth markets for SMEs, AIM. Through its platforms, the Group offers international business and investors unrivalled access to Europe's capital markets.

Post trade and risk management services are a significant part of the Group’s business operations. In addition to majority ownership of multi-asset global CCP operator, LCH.Clearnet Group, LSEG operates CC&G, the Italian clearing house; Monte Titoli, the T2S-ready European settlement business; and globeSettle, the Group’s newly established CSD based in Luxembourg.

The Group is a global leader in indexing and analytic solutions. FTSE Russell offers thousands of indexes that measure and benchmark markets around the world. The Group also provides customers with an extensive range of real time and reference data products, including SEDOL, UnaVista, and RNS.

London Stock Exchange Group is a leading developer of high performance trading platforms and capital markets software for customers around the world. In addition to the Group’s own markets, over 35 other organisations and exchanges use the Group’s MillenniumIT trading, surveillance and post trade technology.

2.2 Business strategy statement

“Building best in class capabilities; creating a global business; and developing opportunities.

Expanding our global presence and business footprint while delivering growth, both through acquisition and organically.”

Our vision and goals establish what we want to achieve as a business, and our tax affairs will be managed to support them. Our principles describe the way we work, and apply equally to how we manage our tax affairs, in particular being open and honest in our dealings with stakeholders and making sure we deliver on our goals, vision, and strategic objectives.

We have high expectations of ourselves, and the relationships we build with our stakeholders. We want to achieve success, and look to grow through positive, global teamwork.

We operate a robust risk management framework across our business, and this approach will also apply to the management of our tax affairs.

LSEG seeks to legitimately control tax costs but is relatively risk adverse and takes qualified advice where appropriate. We will look to structure commercial transactions in the most tax efficient manner.

Our integrity and reputation is vitally important to the Group and so we consider very carefully the reputational impact of our actions in respect of tax. Consistent with the Group’s business principles, we seek to conduct our tax affairs in a manner that is compliant with legal and regulatory requirements.

2.3 Tax strategy statement

Overview

LSEG’s strategy for taxation is centred around four concepts:

  • To ensure that the Group fulfils its fiscal obligations with regard to the administration and payment of all taxes. 
  • To ensure that the Group’s tax affairs are arranged in an efficient manner, whilst remaining compliant with the tax laws of the jurisdictions in which it operates. 
  • To support the delivery of the Group’s corporate and risk management strategies.
  • LSEG does not undertaken purely artificial transactions in order to obtain a tax benefit and will only enter into transactions, which would be fully justifiable should they become public. Furthermore, all transactions must have a business purpose or commercial rationale.

We understand that collecting and paying tax is an important contribution to the economies and societies in which our businesses operate. LSEG believes its obligation is to pay the amount of tax legally due in any territory, in accordance with rules set by governments.

Tax is a business expense which needs to be managed, like any other, and therefore LSEG may respond to legitimate tax incentives and statutory alternatives offered by governments. We will utilise tax incentives or opportunities for obtaining tax efficiencies where these:

  • Are of a type that the tax authorities would expect;
  • Are aligned with business or operational objectives; and
  • Do not carry significant reputational risk or significant risk of damaging our relationship with the fiscal authorities in the key jurisdictions in which we operate.

Due consideration will be given to LSEG’s reputation, brand, corporate and social responsibilities when considering tax initiatives, as well as the applicable legal and fiduciary duties of directors and employees of LSEG.

We will operate with integrity in our compliance and reporting. Compliance with all relevant legal disclosure and approval requirements will be adopted and all information will be clearly presented to the tax authorities or other relevant bodies, as appropriate. Openness, honesty and transparency will be paramount in all dealings with tax authorities and other relevant bodies.

Relationship with Tax Authorities

It is LSEG’s general policy to be transparent and proactive in all interactions with tax authorities. Our tax teams around the world are required to operate according to a clearly defined set of behaviours, including acting with integrity and communicating openly. The application of this principle should be tailored to each territory style and engagement. Each tax team is encouraged to proactively foster this principle.

We have an open, honest and positive working relationship with tax authorities in the jurisdictions in which the Group operate. We are committed to prompt disclosure and transparency in all tax matters with the authorities. We recognise that there will be areas of differing legal interpretations between ourselves and tax authorities and where this occurs we will engage in proactive discussion to bring matters to as rapid a conclusion as possible.

Control Framework

We will operate an effective tax control framework, focussing on having the right control environment, risk identification, control activities, effective channels of communication and monitoring of our compliance with relevant legislation and our stated strategy. In this context we will develop our people and look to continuously improve how we govern tax in our organisation.