An awareness of TRM throughout the organisation, from the operations to the boardroom, is important to ensure a proactive approach and appropriate governance oversight. TRM should be core to every business decision, from a transaction's inception to its completion and post-implementation.
Exxaro is committed to complying with the code of corporate practices and conduct set out in King IV. In terms of this code, Exxaro's board and audit committee assume responsibility for managing tax risks and ensuring Exxaro's tax strategy is aligned with its business strategy. Tax and tax risks are always on the audit committee's agenda. Operationally, the group tax manager is accountable for this function, reporting directly to the group finance director.
The corporate tax function is organisationally and physically separate from the finance function and centralised at Exxaro's head office.
The group tax manager reviews tax implications of projects presented to the investment review committee and executive management committee to keep the tax function informed of transactions at inception stage, particularly decisions with significant impact. This ensures effective tax planning and TRM for operational cost savings.
|Board level oversight||
|Group level executive management and oversight||
Chief risk officer
Chief audit executive and internal audit
|Operational management and oversight||
Group tax manager
Corporate tax function – tax department employees
The TRM framework was updated in 2022 and approved by the board in November 2022. The updated framework includes standard operating procedures for VAT and diesel refunds in terms of the diesel rebate scheme, as well as for carbon tax.
The group tax manager is responsible for implementing and monitoring compliance with controls and procedures prescribed by the framework as well as identifying, analysing and evaluating the impact of events and associated risks on the group's strategic objectives.
Our board, audit committee, executive management and other internal and external stakeholders are informed about TRM activities. Exxaro's risk reporting is driven by stakeholder expectations and requirements and our open and transparent reporting objective.
The group tax manager provides quarterly and biannual reports to the audit committee on:
Exxaro maintains transfer pricing policies for offshore transactions with connected parties. In addition to applying the local tax laws of the jurisdictions in which we operate, we follow the Organisation for Economic Co-operation and Development's principles on transfer pricing and other international tax matters to ensure we pay tax in the jurisdictions in which we operate.
Our tax function upholds group document retention policies and uses the SARS e-filing system as an additional document database.
Exxaro's stakeholders can anonymously report any concerns, breaches of Exxaro's code of ethics, fraud or misconduct that includes tax matters on an independent platform.
Our ESG report provides more detail on Exxaro's fraud and ethics hotline.
Exxaro mitigates tax risk through four lines of defence:
In 2022, our internal auditors conducted follow-up audits on carbon tax, VAT on export transactions and diesel refunds as per the internal audit team's assessment. All internal audit findings were cleared by 31 December 2022. Standard operating procedures were adjusted to address internal control deficiencies. There were no new audit findings in 2022.
The following SARS audits were conducted during 2022:
|Legal entity||Tax type||Period audited||Status of audit||Result of audit|
|Exxaro Coal Proprietary Limited (Exxaro Coal)||Income tax||2018 year-of-assessment||In progress||SARS issued audit findings; Exxaro responded to the findings. We are awaiting SARS's response.|
|Exxaro Coal Mpumalanga Proprietary Limited (Exxaro Coal Mpumalanga)||Income tax||2018 to 2020 years-of-assessment||In progress||SARS issued audit findings; Exxaro responded to the findings. We are awaiting SARS's response.|
|Exxaro Coal Mpumalanga||Diesel refunds||December 2018 to February 2021||Completed||SARS issued a letter of demand in April 2022 in conclusion of the audit.|
The following tax years are open to SARS for assessment. Income tax filings to SARS prescribe after three years in terms of the Tax Administration Act, 2011 (Act 28 of 2011) (Tax Administration Act) and after five years in terms of Swiss tax legislation.
|Entity||Open years of assessment|
|Exxaro Coal||2018 to 2021|
|EITAG||2017 to 2021|
|Material to the group|
|Exxaro Coal Mpumalanga||2018 to 2021|
|Exxaro Resources||2019 to 2021|
|Amakhala Emoyeni Renewable Energy Project 1 Proprietary Limited (Amakhala Emoyeni)||2019 to 2021|
|Tsitsikamma Community Wind Farm Proprietary Limited (Tsitsikamma community windfarm)||2019 to 2021|
Only entities classified as major subsidiaries or material to the group have been listed. A major subsidiary represents 25% or more of total assets or revenue of the consolidated group results (JSE Limited Listings Requirements service issue 25). Material entities do not meet the 25% criteria but are material to the group.