GROUPON’s Approach to Tax
Introduction

GROUPON is a global leader in local commerce, offering a vast mobile and online marketplace where people discover and save on amazing things to do, see, eat and buy.

GROUPON’s goals are to create long-term value for shareholders by connecting small businesses with consumers and helping build vibrant communities and neighborhoods in the process, to be a great company with the highest ethical and legal standards and to be a great place to work. At GROUPON, we are guided by the following principles – Do the right thing; Follow the law; Act ethically; Treat people properly; and Speak up. Our approach to tax follows the same principles.

GROUPON Tax Management Principles and Strategy

GROUPON is committed to complying with tax laws in a responsible manner. We pay many different types of direct and indirect taxes, including corporate income taxes, sales taxes, VAT, customs duties, employment taxes and other taxes. GROUPON’s UK operation has historically been one of the largest and most important of our international businesses and has paid a significant amount of tax over the years.

The taxes we pay and collect are a part of our economic contribution to the countries in which we operate. We recognize that the taxes we collect and pay are part of our social responsibility; therefore, we pay all taxes due in each country while also availing ourselves of available deductions, credits and incentives. We enter into structures that supports our business and reflects commercial and economic activity and do not engage in artificial tax transactions. We comply with relevant tax laws, and we try to minimize the risk of uncertainty or disputes. We strive to establish open and constructive relationships with tax authorities. We work collaboratively wherever possible with tax authorities to resolve disputes and to achieve early agreement and certainty. We support the principle of greater transparency that increase understanding of tax systems and the building of public trust. We enter into transactions between GROUPON group companies on an arm’s-length basis and in accordance with current OECD principles. Tax incentives and exemptions are sometimes implemented by governments and fiscal authorities in order to support investment, employment and economic development. We support initiatives to simplify and improve tax regimes to encourage investment and economic growth, and where we adopt such initiatives, we apply them in the manner intended.

GROUPON tax staff have responsibility for managing the taxation affairs of our legal entities. GROUPON recognises that in some cases, there can be complex laws and interactions of rules that may require support in determining the appropriate tax treatment of specific items; therefore, the tax team is supported by advisers, as needed. In this way, GROUPON manages its tax risks by ensuring the necessary resources are available to assist our teams.

We follow GROUPON’s risk management system as part of our internal control processes. GROUPON, Inc. is a public company that files financial statements with the United States Securities and Exchange Commission; thus, it is required under the Sarbanes Oxley Act (“SOX”) to establish internal controls and procedures applicable to financial reporting, to demonstrate its ongoing effectiveness and to appropriately document adherence to those controls. Groupon has a significant team of Internal Audit personnel centrally located in the Groupon Chicago office that assesses the efficiency, effectiveness, sustainability, monitoring and alignment of internal controls. The Tax SOX controls cover all key responsibilities of the Tax function, including such items as transfer pricing, domestic and international compliance, tax provision, indirect taxes, uncertain tax positions, documentation of tax positions and financial reporting.

We identify, assess and manage tax risks and account for them appropriately. We implement risk management measures including controls over compliance processes and monitor their effectiveness. The head of tax owns and implements our approach to tax. The head of tax is also responsible for ensuring that policies and procedures that support the approach are in place, maintained and applied consistently around the world, and that the global tax team has the skills and experience to implement the approach appropriately. We utilize the local offices of the Big 4 public accounting firms and/or global law firms as necessary to ensure understanding of local laws and to facilitate compliance. These firms assist in preparing direct and indirect local tax returns, provision computations, transaction consulting and any other assistance as needed. We analyze each situation carefully to determine how best to comply with all applicable laws and regulations while optimizing GROUPON’s tax position. Our approach to tax is applicable across the GROUPON group.

GROUPON has established an open and constructive relationship with HMRC to discuss significant transactions impacting the UK in current, future and prior periods and wants to employ a collaborative approach with HMRC.

This statement is published in accordance with GROUPON’s duty under paragraph 19 of Schedule 19 to the UK Finance Act 2016. We review and update this annually. It was last published on 31 December 2017.