Merck KGaA, Darmstadt, Germany, and its subsidiaries operate worldwide and are consequently subject to different national tax laws and regulations. National tax audits of Group entities are conducted on an ongoing basis by the tax authorities of the countries in which the Group operates. Tax risks result in particular from changes in national tax laws and regulations, case law and interpretation by national tax authorities, as well as from significant transactions such as acquisitions, divestments and reorganizations.
Findings of the national audit authorities of the various countries may lead to higher tax expenses and payments and may also have an impact on the amount of tax receivables and liabilities and on deferred tax assets and liabilities.
The resulting tax risks are regularly and systematically reviewed by the tax function. Appropriate standards are in place to identify tax risks at an early stage, review and assess them and minimize them accordingly. Measures to reduce risks are coordinated by the tax department with the national companies. Risks in addition to those already considered in the balance sheet are classified as improbable to possible with potential moderate to substantial impact on the net asset, financial position, and results of operations.
For information on the accounting and measurement policies for income taxes, please refer to the section “Income tax” in “Notes to the Consolidated Financial Statements” in the annual report.