Taxation
Providing NXP taxation principles, approach, governance and engagements applied across our geographic operational footprint.
Overview
- Complaint with all applicable taxation laws.
- Profit allocation aligned with international tax principles (OEDC).
- Zero toleration for the facilitation of tax evasion.
- No presence in blacklisted countries defined by the European Union.
Tax Strategy
NXP follows a tax strategy that is sustainable, transparent, fully aligned with well-known recognized international tax principles and maintain strict adherence with applicable tax laws. NXP aims to support stable, transparent and predictable tax systems that incentivize long-term investment and economic growth. NXP’s tax structures are based on global standards and frameworks supported by the Organization for Economic Cooperation and Development (OECD).
Governance
The Tax department is led by a Senior Vice President (SVP), reporting directly to the Chief Financial Officer (CFO). The CFO is responsible for updating the Audit Committee of the Board of Directors on a regular basis, with support from the Tax department leadership. NXP reviews and approves tax plans and targets annually, consistent with industry-wide, best-in-class control and governance frameworks.
The Tax department is a centralized organization that manages both regional and functional requirements. The organization regularly engages with external tax advisors and/or local tax authorities to provide assurances that our tax obligations are properly, effectively, correctly handled, and disclosed in annual and quarterly reports.
Risk Assessment and Mitigation
NXP operates on a global basis, and is potentially exposed to numerous risks, including those related to taxation. The risks include, but are not limited to:
- Unfavorable changes in the respective tax laws and regulations to which NXP is subject
- Interpretation of tax law or regulations
- Conclusion or amendment of existing tax treaties by regional tax administrations
- Unpredictable variation in foreign exchange rates and possible geopolitical conflicts, including the increase of barriers to international trade
When evaluating the acceptable risk limits for taxes, we apply critical and professional reasoning on an issue-by-issue basis.
Within NXP’s global framework, such risks are identified and managed by continuously monitoring the filing process. By operating through regional and functional dimensions, the likelihood of identifying and resolving tax issues in a timely fashion is ensured. Tax accounting processes identify controls to define mitigation procedures for each identified risk. We document the control, mitigation and execution for each identified risk. As an additional measure, tax payments are systematically forecasted and any material deviations between forecast and actuality are analyzed and managed on a weekly basis.
SpeakUp
Anyone can confidentially lodge a complaint concerning potential violations using various reporting channels, such as management, an ethics liaison or the NXP Ethics Committee. Complaints can also be submitted using the phone or web option of the SpeakUp line , which is hosted by an independent third party and facilitates anonymous reporting. A strict policy of non-retaliation is in force to protect any team member who reports potential violations. Processes for informing senior management about allegations include periodic internal reports, although we have no reports of tax-related violations thus far.
Engagement
NXP is committed to open and transparent relationships with tax authorities and foster long-term relationships, grounded on ethical integrity, collaboration and mutual respect. NXP participates in:
- Cooperative compliance program with the Dutch tax authorities
- Annual Total Tax Contribution Project
- Feedback and insights to governments, international organizations and tax advisors