Being a publicly listed state-owned enterprise (SOE) serving as the national energy company of Thailand, PTT has a mission to foster national energy security, economic prosperity, corporate sustainability of the corporate and of the Thai society as a whole, whereby the rights and interests of all stakeholders – including the country, governments, societies, communities, investors, customers and business partners, are well responded. PTT has been pursuing all its businesses while adhering to promoting national sustainable development, striving for not only economic returns, but also the highest attention to societies, communities and the environment. This multi-stakeholder approach has enabled PTT to reach a higher level of transparency and sustainability.
PTT is committed to be an organization that generates economic growth, enhancing Thailand’s competitiveness to develop the society and people’s well-being. With innovations and technology, we are the driving force in transitioning people, society, community, and environment forward, in line with our vision of “Powering Life with Future Energy and Beyond.” Our mission is to respond to all stakeholders in a balanced way, the country, society, shareholders, clients, business partners and our workforce. We promote the organizational values of SPIRIT: S for Synergy; P for Performance Excellence; I for Innovation, R for Responsibility for Society, I for Integrity & Ethics, T for Trust & Respect. The vital elements of Integrity and Ethics encompass transparency, compliance and good governance, which are maintained in every aspect of our operations across PTT Group and in all the countries we operate.
Moreover, we are committed to the United Nations Global Compact core values on human rights, labor standards, the environment, and anti-corruption, and supportive of the Extractive Industries Transparency Initiative (EITI) principles. The EITI provides a global standard to promote open and accountable management, thereby elevating the sustainability and transparency standards for extractive industries to respond to all stakeholders.
Sustainability Tax StrategyGRI 2GRI 2007-1, 7-2
With its endeavor to be a model organization for sustainability and operational excellence based on good governance, PTT has maintained its status as a member of DJSI World, of which it was the first Thai company to join in 2012 among oil and gas producers (Oil & Gas Upstream & Integrated: OGX).
The DJSI assessment criteria focus on the success and efficiency of business operations, particularly regarding contributions to economic growth and social & environmental development. One key criterion is Tax Strategy. Essentially, DJSI’s Tax Strategy assessment focuses on the public disclosure of tax policy, the transparency on revenue, operating profit and tax reporting, and the management of tax risks. Being assessed by the DJSI since 2014 until present, PTT has repeatedly achieved the full score and the Industry Best for various years, which is significantly above the industry average and DJSI World average.
PTT Group’s taxes paid globally demonstrate our significant contributions to public finances in the countries where we operate. The voluntary disclosure in DJSI shows our intention to maintain transparency on our payments to governments and is consistent with PTT’s support for the Extractive Industries Transparency Initiative (EITI) Principles. As part of our corporate commitment to sustainable development and good governance, PTT is committed to providing transparency about tax payments made to governments and to continue an ongoing leadership in developing best practice in tax transparency.
Regulatory Structure and Tax Policy
Our tax policy
In support of its overall business strategy and values, PTT pursues a tax policy that is principled, transparent and sustainable in the long run. Our tax policy is underpinned by our core values, “SPIRIT”, particularly Responsibility for Society, Integrity and Ethics, and Trust and Respect. These principles are embedded at all levels of our organization and is deployed under the “PTT Group Way of Conduct” to ensure alignment in tax approaches among all PTT Group companies and to promote good governance and sustainability.
Since 2014, the “PTT Group Way of Conduct” has been implemented across PTT Group. Among the thirteen policies, our tax policy sets out the principles that define how PTT Group manages its tax affairs, and aims to reinforce global alignment on tax corporate governance matters. Essentially, we are committed to conducting our business in full compliance with the spirit of relevant rules, laws and regulations in all areas where we operate, domestically and internationally. We strongly believe in paying our fair share of taxes. We trust that income taxes have a substantial impact on our long-term corporate value and that implementing the tax policy is the initial step towards greater transparency and good governance.
We believe our tax policy elucidates our good governance in the area of tax management and tax transparency, balancing the interests of our various stakeholders in the countries we operate. We have further reinforced our tax policy across PTT Group by rolling out PTT Group Tax Policy Guidelines, approved by the CEO representing the member of the Board of Directors, which is reviewed annually in line with the PTT Group Way of Conduct process, to be embedded into the way we do our business to ensure our full compliance, comprising six tax areas: Tax Compliance, Tax Advisory & Planning, Transfer Pricing, Tax Audit, Tax Risk Management, and External Tax Advisor.
PTT Group Global Tax Policy GuidelinesGRI 207-2
PTT Group Tax Risk Management Framework comprises of three layers:
1. The top layer “PTT Group Way of Conduct – Tax Policy” establishes principles that define how PTT Group manages its tax affairs.
2. The middle layer “Global Tax Policy Guidelines” is served as the policy guideline level to support the delivery and implementation of the Tax Policy. This layer provides guidelines on how tax risks are managed across the identified tax activity areas. The Global Tax Policy Guidelines consist of
- Tax Compliance
- Tax Advisory and Planning
- Transfer Pricing
- Tax Audit
- Tax Risk Management
- External Tax Advisor
3. The bottom layer “Operating Procedures” is the detailed process and procedures at the operating level to implementation of the first two layers.
Tax Risk Management Framework
The six Global Tax Policy Guidelines to support the delivery of the Tax Policy deal with the following tax areas:
- Tax Compliance - Sets out the guidelines to ensure that PTT Group is complying with its tax filing obligations in a timely and accurate manner. Diligent professional care and judgment, including ensuring that all tax risks and tax compliance, is taken at an appropriate level and supported by documentation.
- Tax Advisory and Planning - Sets out the guidelines to ensure that new transactions/M&A and etc. are reviewed in a consistent manner to ensure that tax planning is aligned with business and commercial strategies and the tax risks are identified, assessed, reported and managed.
- Transfer Pricing - Sets out the guidelines to ensure that all related-party transactions are conducted at arm’s length and the transfer pricing documentation required to support the transfer pricing methods applied.
- Tax Audit - Sets out the guidelines to ensure that all tax audits and Tax Authority relationships are managed consistently to demonstrate PTT Group’s commitment to engage in an open, mutually respectful and professional manner to enable an efficient and collaborative hearing and resolution of PTT Group’s tax issues.
- Tax Risk Management - Sets out the guidelines to ensure that all personnel with tax responsibilities, or whose business activities may have a tax impact, have a consistent understanding of how tax risk is identified, assessed, reported and managed.
- External Tax Advisor - Sets out the guidelines on the engagement of an external tax advisor, only when required, to ensure that the external tax advice obtained is of a consistently high standard.
Tax Structuring ApproachGRI 207-1PTT Group realizes that profits should be taxed where the economic activities generating the profits are performed and expects to pay ‘fair share’ of taxes on our activities where they take place, and thus disallow the transfer of value created to low/no tax jurisdictions. We are fully aware of direct and indirect risks from aggressive tax planning and do not use contrived or abnormal tax structures that are intended for tax avoidance and have no commercial substance. PTT Management and Board of Directors do not support any activities, aiming to aggressively structure PTT Group’s tax affairs.
In structuring our operations, we consider a wide range of factors and their consequences to balance the commercial, cost (including tax), regulatory and investor perspectives, as well as to ensure that we comply with all necessary obligations applicable to our unique status – a publicly-listed company, a national energy company, and an SOE.
Given the scale, locality, complexity of operating globally in the energy industries and being subject to multiple tax regimes in a number of jurisdictions, there are sound commercial and operational reasons (such as regulatory regimes and structures acquired in historical acquisitions and proximity to customers) for MNC subsidiaries to be established in countries with stable governments and clear regulatory frameworks which may also offer low tax rates. Commercially, a neutral tax territory is often required for joint ventures between PTT Group and our counter-parties having headquarters in different countries.
In the past, locations of our foreign subsidiaries were mainly driven by commercial reasons, in particular, convenience and flexibility of such locations. In the recent years, however, our key considerations have shifted towards reputation and other non-financial risks. PTT has thus instilled a policy across PTT Group, in setting up our offshore subsidiaries, to avoid foreign jurisdictions considered as tax havens. The jurisdictions of PTT Group foreign affiliates are disclosed to all relevant tax authorities in our annual reports and have been regularly reviewed by our group to ensure compliance with all tax requirements and other regulations.
Co-operative Tax Reporting
A growing number of tax regulatory frameworks lately demands for a greater transparency, particularly in the areas of transfer pricing and substance requirements. As the ultimate parent company, PTT has been vigorously encouraging all group companies to strive for the highest level of transparency and governance in managing their tax affairs and raising greater awareness of direct and indirect risks associated with tax across the group.
Since 2015, PTT Group has proactively prepared for the three-tiered transfer pricing documentation requirements – Master File, Local File and Country-by-Country Report. These are new reporting standards and reporting rules initiated under the OECD/G20 Base Erosion and Profit Shifting Project (BEPS) and will provide tax authorities with information on the global allocation of profits, economic activities and taxes of MNC's. By readily fulfilling these tax reporting requirements, our tax transparency can be uplifted to a global level. Since 2021, PTT has been closely monitoring and preparing to fulfill tax compliance obligations as stipulated under BEPS 2.0 Pillar 1 and Pillar 2. This would significantly foster our group-wide’s readiness and tax transparency for PTT as the ultimate parent as well as our affiliates being constituent entities in the jurisdictions PTT Group operates.
Revenue Transparency 2022GRI207-4
Our Broader ContributionGRI 207-3
PTT Group recognizes that the taxation of our profits and activities in the countries where we operate helps to fund the infrastructure and welfare support systems of those communities. Nevertheless, tax payments are one element of our broader economic and social contributions. The contributions that we make to the communities in which we operate extend beyond the taxes and other payments made to those governments. Our voluntary economic and social contributions are done in various means.
In addition to numerous Corporate Social Responsibility (CSR) projects carried out every year, PTT has introduced Creating Shared Value (CSV) on top of the business philosophy toward society, communities and the environment. PTT places strong emphasis on the in-depth sustainability on its belief that education is the first stage of human capital development for the nation. This leads to our establishment of the Vidyasirimedhi Institute, a tertiary education institution specializing in research for sustainable development, and the Kamnoetwit Science Academy, a high school focusing on science and mathematics preparing talented students to become future scientists.
PTT Group firmly believes in tax transparency and good tax governance to uphold our sustainable growth for all stakeholders. We are committed to maintaining and improving our tax reporting and transparency procedures.
- Sustainable Governance