Anti-Facilitation of Tax Evasion Policy
Anti-Facilitation of Tax Evasion Policy
A good reputation is a hard-won asset which we must protect. Our ability to tender for new business and our relationship with the full range of our stakeholders depends a great deal upon the good reputation that we have established. This means all of us acting to the highest personal, ethical and corporate standards in everything we do. It means making sure all our actions and decisions support the Group’s vision and values as encapsulated in The OTIS Absolutes. In short, we do business ethically, lawfully and honestly.
This policy which has been approved by OTIS WHQ is designed to help you understand the UK legislation relevant to fighting tax evasion or its facilitation, how to recognize and deal with the risks of facilitating tax evasion, and also to provide you with details of further help and training which you may need. I encourage you to seek further guidance or assistance if feel you need it in any way.
Your personal contribution to protecting and enhancing our reputation, including by looking out for suspicious activities and by complying with this policy, is important to OTIS.
I am committed to this policy and would ask you to show your commitment too by reading it and, if you have any queries or concerns at all, getting in touch as set out at the end of the policy.
Mike Ryan VP & Chief Accounting Officer
For and on behalf of OTIS
Anti-Facilitation of Tax Evasion Policy and Procedures
In the light of the UK Criminal Finances Act 2017 (CFA2017), OTIS has adopted this Anti-Facilitation of Tax Evasion Policy (referred to as “the” or “this” “Policy” in this document) as part of our commitment to preventing persons associated with the Company from engaging in the criminal facilitation of tax evasion in the UK or in a foreign country. This Policy reflects the high standards of security, ethics and quality as laid down in our OTIS Absolutes.
OTIS is committed to preventing the facilitation of tax evasion by associated individuals or businesses anywhere within its operations. This Policy governs all our business dealings and the conduct of all persons or organizations who are appointed to act on our behalf. All members of staff and all who have, or seek to have, a business relationship with OTIS must familiarize themselves with this Policy and are required to act at all times in a way which is consistent with the Policy.
OTIS conducts all business in an honest and ethical manner. We take a zero-tolerance approach to facilitating tax evasion, whether under UK law or under the law of any other country.
Our vision is to be the most highly respected company in the industry, and our success in this endeavor is dependent upon how all employees behave. It is also our policy to comply with the law wherever we operate.
We will uphold all laws relevant to countering tax evasion, including the UK Criminal Finances Act 2017, in all the jurisdictions in which we operate.
In many countries (including the UK), it is a criminal offence to dishonestly evade tax or to assist others to do so. This can deprive governments of the revenues needed to fund vital public services. We expect the businesses and people we engage with to comply with their tax obligations. Tax evasion or its facilitation has no place at OTIS and we do not tolerate any of our Directors, Officers or employees, agents or business partners knowingly assisting or encouraging tax fraud by any of our customers, suppliers or others that we do business with.
Our Company is committed to acting professionally, fairly and with integrity in all our business dealings and relationships wherever we operate; and to implementing and enforcing effective systems to counter tax evasion facilitation.
We are committed to the following principles:
- - We will carry out business fairly, honestly and openly.
- - We will not provide services or sell to parties where we know or suspect that the services or the items sold will be misused or abused by a customer for the purposes of fraudulent tax evasion.
- - We will not buy services or goods from any supplier where we know or reasonably suspect them not to be properly declaring their income and any relevant tax and duties in connection with those activities.
- - We will not seek advice to circumvent laws and regulations fighting against tax evasion and to facilitate tax evasion.
- - Any colleague found to be in breach of these principles will face disciplinary action up to and including dismissal.
- - No colleague will suffer demotion, penalty, or other adverse consequence for refusing to engage in the sale or purchase of services and goods where they reasonably suspect or know tax evasion to be taking place. Our clear policy is not to engage in transactions where tax evasion is contemplated, present or suspected to be present, even if it may result in us losing business.
- - We expect our agents and others who represent us also to commit to these principles.
- - We are committed to a programme to counter the risk of our being involved in the facilitation of tax evasion, which includes the following actions with our counterparties.
- making it a condition of doing business with us that they will act diligently to account for any taxes owed.
- undertaking additional checks on their ownership structure or on where their business is managed.
- asking them to prove they are registered for tax.
- when we buy or sell goods or products, undertaking appropriate checks to ensure that tax has been paid.
- any other procedures we consider to be reasonable.
Any concerns relating to a breach of this policy should be reported in accordance with the procedures highlighted below.
This Policy is intended to ensure that our employees, agents and business partners do not engage in tax evasion and its facilitation anywhere in the world.
We expect high standards from our employees and do not tolerate anyone engaging in tax evasion or helping others to do so. We will endeavor to ensure that others who perform services for or with us, for example, agents, advisers, consultants, JV Partners etc. (referred to as "Business Partners") do not engage in tax evasion nor facilitate tax evasion whilst performing those services. This Policy applies irrespective of where business is being conducted, regardless of jurisdiction. Where there are differences between applicable law and this Policy, you must apply the highest standard of behaviour.
1.1 The purpose of this Policy is to:
(a)set out our responsibilities, and the responsibilities of those working for us and with us, in observing and upholding our position on preventing the criminal facilitation of tax evasion; and
(b)provide information and guidance to those working for us on how to recognize and avoid tax evasion
1.2 As an employer, if we fail to prevent our employees facilitating tax evasion, we can face criminal sanctions including an unlimited fine, as well as exclusion from tendering for public contracts and damage to our reputation. We therefore take our legal responsibilities seriously.
1.3 A number of particular risks for our business can be identified. To address these risks, risk assessments will be prepared and these will be communicated to senior managers and to relevant third parties to ensure that they are embedded and understood. Additionally, employees, those in our business chain and other relevant third parties are required to review, understand and provide signatures demonstrating their understanding of this and other relevant policies.
1.4 In this Policy, third party means any individual or organization with whom OTIS works, and includes suppliers, customers, volunteers, casual workers, agent staff, contractors and agents.
2 What is the facilitation of Tax Evasion and how could you facilitate it?
Tax evasion occurs when a person knows they have an obligation to account for tax but dishonestly does not do so.
They may or may not try to take steps to disguise or misrepresent what they are doing. The key is that they know tax is due and deliberately do not pay it. It is possible to evade tax without involving others but in many cases others will be involved.
Examples include misrepresenting the services rendered or the location in which they took place, or who carried them out. If we were to accept and not challenge this, we could be 'facilitating' the tax evasion and committing a criminal offence. Simply ignoring what is occurring or not reporting suspicions to a Manager or to Legal or an Ethics & Compliance Officer (ECO) is not acceptable.
Tax evasion is not the same as tax 'avoidance'. Tax avoidance is where a person, often acting on professional advice, has entered into arrangements designed to legally minimize their tax liabilities.
For the purposes of this Policy:
- (a) Tax evasion means the offence of cheating the public revenue or fraudulently evading UK tax, and is a criminal offence. The offence requires an element of fraud, which means there must be deliberate action, or omission with dishonest intent;
- (b) Foreign tax evasion means evading tax in a foreign country, provided that that conduct is an offence in that country and would be a criminal offence if committed in the UK. As with tax evasion, the element of fraud means there must be deliberate action, or omission with dishonest intent; and
- (c) Tax evasion facilitation means being knowingly concerned in, or taking steps with a view to, the fraudulent evasion of tax (whether UK tax or tax in a foreign country) by another person, or aiding, abetting, counselling or procuring the commission of that offence. Tax evasion facilitation is a criminal offence, where it is done deliberately and dishonestly
Under the UK Criminal Finances Act 2017, a separate criminal offence is automatically committed by an organization where the tax evasion is facilitated by a person acting in the capacity of an Associated Person to that body. “Associated Person” is defined very widely and includes any person (individual or corporate) who represents (or provides a service for or on behalf of) the business - employees, contractors, agents, and in certain circumstances external suppliers. For the offence to be made out, the Associated Person must deliberately and dishonestly take action to facilitate the tax evasion by the taxpayer. If the associated person accidentally, ignorantly, or negligently facilitates the tax evasion, then the corporate offence will not have been committed.
OTIS does not have to have deliberately or dishonestly facilitated the tax evasion itself; the fact that the associated person could do so creates the liability for the company.
Tax evasion is not the same as tax avoidance or tax planning. Tax evasion involves deliberate and dishonest conduct. Tax avoidance is not illegal and involves taking steps, within the law, to minimize tax payable (or maximize tax reliefs).
Tax means all forms of UK taxation, including but not limited to corporation tax, income tax, value added tax, stamp duty, stamp duty land tax, digital tax, national insurance contributions (and their equivalents in any non-UK jurisdiction) and includes duty and any other form of taxation (however described).
3 Why is this Policy important?
Facilitation of tax evasion is a criminal offence and the penalties can be severe including fines or imprisonment.
OTIS itself can also be guilty of an offence and may face prosecution. Having a conviction may bar OTIS from operating in certain sectors or bidding for certain work.
OTIS could also have to pay a significant fine.
This could be very damaging to OTIS.
4 What is expected from you?
All employees must read and observe this Policy, act with integrity and comply with applicable laws. Managers should create an environment that encourages compliance with this Policy.
Everybody is encouraged to report concerns and to ask questions regarding these issues.
Personnel responsible for the Policy
A) The Managing Director has overall responsibility for this Policy and for reviewing the effectiveness of actions taken in response to concerns raised under this Policy.
B) The Finance Director has day-to-day operational responsibility for this Policy.
Who must comply with this Policy
This policy applies to all persons working for and with OTIS including employees, volunteers, interns, casual workers, agency staff, contractors and third parties.
4.1. What You Must Not Do
It is not acceptable for you (or someone acting on your behalf) to:
(a) engage in any form of facilitating tax evasion or foreign tax evasion;
(b) aid, abet, counsel or procure the commission of a tax evasion offence or foreign tax evasion offence by another person;
(c) fail to promptly report any request or demand from any third party to facilitate the fraudulent evasion of tax (whether UK tax or tax in a foreign country), or any suspected fraudulent evasion of tax (whether UK tax or tax in a foreign country) by another person, in accordance with this policy;
(d) engage in any other activity that might lead to a breach of this policy; or
(e) threaten or retaliate against another individual who has refused to commit a tax evasion offence or a foreign tax evasion offence or who has raised concerns under this policy.
4.2. Your Responsibilities
You must ensure that you read, understand and comply with this policy.
The prevention, detection and reporting of tax evasion and foreign tax evasion are the responsibility of all those working for us or under our control. You are required to avoid any activity that might lead to, or suggest, a breach of this Policy.
You must notify your manager as soon as possible if you believe or suspect that a conflict with this policy has occurred, or may occur in the future. For example, if an employee or supplier asks to be paid into an offshore bank account, without good reason, or a supplier asks to be paid in cash, indicating that this will mean the payment is not subject to applicable tax. Further “red flags” that may indicate potential tax evasion are set out in section 4.5.
4.3. Training and Communication
The Finance Director will be formally briefed on CFA2017, the outcomes from risk assessments and this policy and will also identify and deliver other bespoke training and awareness for other staff where CFA2017-specific risks are identified. Such training will form part of wider financial crime detection and prevention training.
In addition to this policy, please refer to Corporate Policy Manual 48 (Anti-Corruption), the OTIS Supplier Code of Conduct and the OTIS Finance Policy Manual, all of which are available on the company intranet, and are subject to regular review.
- The Finance Policy Manual references our commitment to complying with all applicable tax laws/regulations, and sets out the strict OTIS group financial controls and processes which also assist in countering risks of facilitating tax evasion – including controls on record keeping and ensuring that all invoices/payments are subject to appropriate internal approval/authorisation processes.
- The OTIS Supplier Code of Conduct - reiterating the content of The OTIS Absolutes - requires suppliers to comply with all applicable laws/regulations, and to accurately record all transactions and expenses related to OTIS in their books and records.
Our zero-tolerance approach to tax evasion and foreign tax evasion must be communicated to all suppliers, contractors and business partners at the outset of our business relationship with them and as appropriate after that.
4.4. Breaches of this Policy
Any employee who breaches this policy may face disciplinary action, which may result in dismissal for misconduct or gross misconduct.
We may terminate our relationship with other individuals and organizations working on our behalf if they breach this policy.
4.5. Potential Risk Scenarios: “Red Flags”
Red flags - Employees should look out for potential "red flags". Red flags must be reported immediately to the OTIS Group Ethics & Compliance Director and VP & Chief Accounting Officer.
The following is a list of possible red flags that may arise while you work for OTIS and which may raise concerns related to tax evasion or foreign tax evasion.
The list is not intended to be exhaustive and is for illustrative purposes only. If you encounter any of these red flags (or other activity likely to fall under this Policy) while working for OTIS, you must report them promptly to your manager:
- a) the customer or supplier refuses or fails to confirm that it will comply with our additional due diligence checks;
- b) the customer or supplier operates or is resident in a country where tax evasion is more prevalent;
- c) you become aware, in the course of your work, that a third party has made or intends to make a false statement relating to tax; has failed to disclose income or gains to, or to register with, HMRC (or the equivalent authority in any relevant non-UK jurisdiction); has delivered or intends to deliver a false document relating to tax; or has set up or intends to set up a structure to try to hide income, gains or assets from a tax authority;
- d) you become aware, in the course of your work, that a third party has deliberately failed to register for VAT (or the equivalent tax in any relevant non-UK jurisdiction) or failed to account for VAT;
- e) a third party requests payment in cash and/or refuses to sign a formal commission or fee agreement, or to provide an invoice or receipt for a payment made;
- f) you become aware, in the course of your work, that a third party working for OTIS as an employee asks to be treated as a self-employed contractor, but without any material changes to their working conditions;
- g) a third party requests that payment is made to a country or geographic location different from where the third party resides or conducts business;
- h) a third party to whom the Company has provided services requests that their invoice is addressed to a different entity, where the Company did not provide services to such entity directly;
- i) a third party to whom the Company has provided services asks for the description of services rendered on an invoice in a way that seems designed to obscure the nature of the services provided;
- j) an invoice from a third party that appears to be non-standard or customized;
- k) a third party insists on the use of side letters or refuses to put terms agreed in writing or asks for contracts or other documentation to be backdated;
- l) the Company has been invoiced for a commission or fee payment that appears too large or too small, given the service stated to have been provided;
- m) a third party requests or requires the use of an agent, intermediary, consultant, distributor or supplier that is not typically used by or known to the Company.
- n) the customer or supplier has unusual invoicing or documentation practices for example invoicing a different company to the one receiving the service
- o) the customer or supplier requests for payments to be:
- - made in cash;
- - paid to or through another entity;
- - paid to bank accounts in another country;
- - paid in another currency; or
- - paid in advance where that is not accepted practice for that to occur.
5. Business Partners and Join Venture Partners
Business Partners and Joint Venture Partners- we expect our Business Partners and Joint Venture Partners to adhere to this Policy.
We improve our procedures and due diligence checks, to include the Anti-Facilitation of Tax Evasion Policy.
Joint Venture Partners are all parties with whom we enter into a joint venture, consortium or similar relationship.
- - We could be liable if a Joint Venture Partner engages in the facilitation of tax evasion.
- - Joint Venture Partners must be carefully selected, appointed and monitored.
- - Joint Venture Partners should be provided with a copy of this Policy and asked to confirm they will comply with it or that the JV will follow similar rules to those set out in this policy.
5.1 Dealings with Business Partners
Business Partners should be told where to access this Policy and asked to confirm they have understood it. We will ask all Business Partners to confirm they will apply our principles and that they have similar Policies. We reserve the right to inspect them.
New Business Partners should have an agreement that contains appropriate wording to address this risk. Contact Group Legal if you need help with this. For existing Business Partners, the wording will be updated at the next renewal.
5.2 Monitoring of Business Partners
Red flags - Employees should look out for "red flags" (see above). Any red flags should be reported immediately.
Reviews - Higher risk Business Partners will be reviewed for compliance periodically and lower risk Business Partners will be reviewed not less than every 3 years.
Audits- We will carry out appropriate periodic audits. Due diligence gathered will be sampled during audits.
Business Units must keep a record of all their Business Partners and any due diligence conducted.
5.3 Joint Venture Partners
Books, records and accounts must be kept which accurately and fairly reflect all transactions.
The following items list major “red flags” relative to books, records and accounts:
- - making records showing a payment to one person when, in fact it was made to someone else
- - submitting inaccurate expenses
- - records that inaccurately characterise/describe the true nature of transactions or payments
- - claims for services, products or equipment not received
- - creating or maintaining unrecorded funds or assets of the company (including unrecorded "petty cash").
It is important that we only work with Joint Venture Partners who we believe will not engage in tax evasion or its facilitation. Before entering into a Joint Venture, due diligence should be conducted. A risk assessment should be conducted first to determine the appropriate level of due diligence. You should contact The Group Compliance department for help with the form of risk assessment to use and the level of due diligence needed.
Any agreement entered into with a Joint Venture Partner should contain Anti-Facilitation of Tax Evasion wording. You should contact Legal/Compliance if you need help with this. All existing and new Joint Venture Partners should be provided with a copy of our Policy and asked to confirm in writing that they will comply with it.
6 Bookkeeping and Accounting
No payments should be made, approved, or processed where there is any suspicion that any part of the payment is to be used for any purpose other than that described by the documents supporting the payment. No "off the books" or unrecorded funds or accounts are permitted. Please also refer to the Finance Policy Manual.
7 Disciplinary action
Tax evasion and its facilitation is a serious criminal offence. You have a duty to OTIS and breaches of this Policy may result in disciplinary action, up to and including dismissal/termination of contract. In addition, a colleague who breaks the law may themselves face criminal proceedings, fines or imprisonment.
For Business Partners, non-compliance with this Policy and any applicable laws will be considered to be a material breach of contract and may result in the termination of any relationship with us and the matter being reported to the police.
8 Statement of commitment
We will not tolerate any form of tax evasion or its facilitation. This Policy demonstrates the OTIS’s zero tolerance approach to tax evasion or its facilitation.
The Policy will be regularly reviewed and updated if necessary.
This Policy applies to OTIS UK and all OTIS Group companies/employees/contractors outside the UK who represent or provide services for/to OTIS UK - and as such should be seen as setting the broad rules and guidance for all.
9 Effective Monitoring
Our businesses must establish and maintain an effective system for monitoring compliance with this policy. We will set a monitoring plan to ensure that this is done.
10 Who can I contact if I have any questions?
If you have a concern or suspect a violation of this Policy we want you to speak up immediately.
Speaking up can be a difficult thing to do, so be reassured that all information received will be treated seriously and investigated appropriately. If you act in good faith, believing your information is accurate, we will protect you.
Some concerns can be addressed by speaking to the person whose conduct is the cause for concern. We understand that this is not always possible, so we suggest that you speak to your line manager. If, for whatever reason, you do not feel comfortable doing this, you can contact any member of the Human Resources, Ethics & Compliance or Legal departments.
Further information about channels to ask questions and seek guidance is available at: https://www.otis.com/en/us/our-company/ethics-compliance/reporting-channels
How can you raise a concern?
If you have any questions concerning this policy or would like further guidance, please contact: Mike Ryan, VP & Chief Accountant Officer
OTIS Farmington USA