Tax Strategy | First Abu Dhabi Bank (FAB)

UK Tax Strategy

The First Abu Dhabi Bank P.J.S.C. (“Group” or “Bank”) including its London branch publishes its Group Tax Strategy in accordance with paragraph 22(2), Schedule 19 of Finance Act 2016, and remains for the year ending 31st December 2023.

The Group is headquartered in the United Arab Emirates (“UAE”), and in particular, in the Emirate of Abu Dhabi. The Group is seen as the largest Bank in the region on a number of metrics, and carries out its responsibilities accordingly. The UAE announced the introduction of a Federal level Corporation tax in January 2022, which would be effective for the Bank from 1st January 2024, following the introduction of Value Added Tax in January 2018. This announcement included transfer pricing requirements largely to follow the guidelines of the OECD pronouncements.

In the UK, the Bank has adopted HMRC’s Code of Practice for the Taxation of Banks and continues to be supportive of global initiatives to improve tax transarency, ESG accountibility, and compliance. The Bank publishes an annual Environmental, Social and Governance [“ESG’] report complaint with Global Reporting Initiative (GRI) 2016 standard core, and Sustainability Accounting Standard Board (SASB) Index: Commercial Banks, as well as being AA (“Leader”) rated by the MSCI ESG index.

Governance

The Group has an established Tax Control Framework (“Framework”) to which it adheres to. For ease of reference, the Framework is set out in the Appendix to the Strategy document. Leading from the Framework are governing principles and policies embedded within the wider Group organisation.

The London branch is aligned on its SAO responsibilities and obligations thereunder. While the Group has a Tax function comprising of adequately qualified staff to manage the tax affairs of such a Group, it leverages the wider Finance function in each geographical location in which it operates with sufficient support from local external professional advisors to manage its tax affairs. All tax compliance and reporting requirements are the responsibility of local Finance functions, and any advisory or governance issues are responsibility of the Group tax function.

Planning

All business transactions, products, client relationships, and counter-parties are purely driven by commercial and business needs. Accordingly, any tax outcome is consequential. Tax review and / or due diligence on business transactions and commercial matters are conducted to identify documentation requirements, tax indemnities and warranties provided (or required) by the Group, and where a choice of [tax] outcome is available, to opine on the most suitable outcome in relation to the proposal. The wider Tax control framework incorporates the necessary attention required.

The Bank in the normal course of its business does not provide any tax advice or direction to its clients, counter-parties, or to third party agents. Accordingly, any tax planning undertaken by the Group whether on its own corporate affairs, financial and economic products, or other transactions, is limited to choosing only an optimal outcome where a choice of outcomes are available.

Generally, planning undertaken by Group tax is commensurate with scheduling or forecasting rather than arrangements. Given this the Group considers itself to be fairly benign on a risk of challenge for tax planning.

Risk

The Group intent is to pay its fair share of taxation in all the jurisdictions it operates in, and is mindful of its commitments to the wider environment including, its obligtion as a good corporate citizen.

The Group manages its tax risk within the wider Risk Framework and policies of the Group; it has no appetite for unnnecessary [Tax] risks either planned or consequential. All [tax] risks are captured within the Group’s operating model and each business manages its own tax risk matrix with proper engagement with Group Tax, including use of professional tax advisors as necessary.

The Group operates a 3 Lines of Defence [3-LoD] Risk model with the Group Tax function residing within the wider Group Finance function, which is a direct support function and Control part of the model. Commensurate not only with the complexity of each Business division but also each jurisdiction in which the Group operates, appropriate nexus among Business management, Finance function, Tax function, and external [local] advisors is held at periodic times. In addition, application of regulatory differences between the Financial and Taxation Regulators may need to be considered and accordingly business management appraised with input from Group [Regulatory] Compliance function. Further, the self-assessment nature of the UK Regulatory environment is noted and where specific requirements are identified, monitoring and controls are incorporated as approved by local Senior management with assitance from external advisors as well as input from Group Tax.

Dealing with HMRC

A periodic dialogue is undetaken with the Tax authority in each of the jurisdictions in which the Group operates and an annual meeting with each local Authority with an open and transparent dialogue is encouraged as supported by local tax authority.

Within the UK the two key persons responsible for contact with HMRC are the UK CFO and the Group Head of Taxation supported by local professional tax advisors.