DELTA GALIL TAX STRATEGY
December 2017
Background

The Company was incorporated in Israel in 1975 as a private company in accordance with the Companies Order. In 1982 the Company went public on the Tel Aviv Stock Exchange Ltd.

The Company is engaged in the development, design, production, marketing and sales of underwear, socks, children’s wear, leisurewear and activewear. In addition, following the purchase of the V.F. Corporation Contemporary Brand Coalition division, the Company also engages in development, design, marketing, distribution and sales of branded products from the denim and outerwear category and associated women’s products.

The Company markets its products in the geographic regions in which it is active in retail marketing, through the retail chains in its possession and online – in the United States, Europe and Israel.

The Company designs and develops its products primarily in Israel, Germany, Switzerland and the US. The Company manufactures the products it sells both via subcontracting and in its factories in the Middle East, Europe, Central America and Far East.

Delta operates in more than 20 countries and is subject to multiple tax regimes and regulations. Tax is embedded in almost every aspect of doing business and heavily impacts the key financial data and performance of a company. Our key objectives are to ensure full compliance with the tax regulations of all countries in which we operate.

Our Approach

Delta operates as a responsible tax payer and collector to ensure that we protect the reputation of the Company. In order to achieve consistent and full implementation of this target we operate local tax functions in our major operations. We believe that responsible tax behavior is an essential element of our sustainability strategy. The taxes we pay are an important part of our contribution to local economies and support the development of countries in which we operate.

We support stable, transparent and predictable tax regimes that incentivize long-term investment and economic growth.

Tax Strategy

We aim for our tax affairs to be transparent and sustainable in the long term. Our tax strategy is based on a number of key principles:

• Meet all legal requirements; make all appropriate returns and payments;

• Safeguarding of Company’s reputation as a responsible tax payer; and

• We pursue an open and constructive dialogue with tax authorities that are based on respect, transparency and trust.

Tax Governance and Tax Risk Management

The Company’s Board of Directors acknowledges that it has responsibility for fully complying with the tax laws in all relevant jurisdictions.

We operate in number of tax jurisdictions, some of which have complex tax regimes. Tax legislation can also be subject to interpretation.
To ensure a robust and consistent approach, Delta tax issues are managed both at a strategic and operational level. It supports tax risk management and ensures adherence to our tax principles, requiring documented policies and procedures across all our operating companies.

The Company recognizes that tax is a complex subject and that sometimes help will be needed to evaluate our business decisions on that matter.
As such, the Company’s finance team handles tax issues on a day to day basis and from time to time external support from tax advisors is obtained.

Our Board of Directors and its financial statements Committee have oversight for ensuring tax risk is monitored, controlled and mitigated and are updated annually concerning any material tax risks or other significant changes on Delta’s Tax position.

The Board of Directors is ultimately responsible for establishing the overall tax governance with the Chief Financial Officer having key oversight and responsibility for monitoring the day to day operation of tax and who is supported by our finance team, as well as professional advisers. We have tax controls in place to manage our tax risks. These controls are monitored frequently to ensure they operate effectively.

Attitude to Tax Planning

Our approach is not to engage in tax planning that does not support genuine commercial activity. The Company does not and will not use tax havens for tax avoidance purposes. The Company will seek to claim the proper statutory reliefs to which it is legally and legitimately entitled.

Tax Risk Appetite

We do not have a formally defined level of acceptable tax risk however we manage our tax risks in a way to have a low tolerance tax risk and proactively engage with advisors to achieve certainty on our tax position.

Working with tax authorities

We seek to be cooperative in all our dealings with tax authorities and we seek to maintain a proactive relationship, encouraging open dialogue on a timely basis.

Where any tax law is unclear or subject to interpretation, we will engage with external tax advisers to ensure we remain compliant in all operations.

Where applicable we will work with tax authorities to attempt to resolve any differences in a timely and professional manner.

Where applicable we will apply for tax clearance to confirm the tax treatment of a specific transaction in advance from tax authorities prior to undertaking the transaction.

Our Contribution in 2016

In 2016, we reported an effective corporate income tax rate of 24% and recorded a $16.0  million income tax expenses. In addition we’ve paid $99.7 million of indirect taxes including payroll, state/city taxes, taxes due to real estate, VAT and other taxes in all countries we operate.


This sets out the strategic tax objectives of Delta Galil Industries and its subsidiaries (“the Company” or “Delta”) and has been prepared in accordance with Schedule 19 of the UK Finance Act 2016.