IBIS ConferenceCSR & TAXMads Bodenhoff, Vice President Finance 21 June 2012
2 7/4/2012 NOVOZYMES PRESENTATIONWhom are the Stakeholders JournalistsUniversities &BusinessSchools Reference - www.internationaltaxreview.com
3 7/4/2012 NOVOZYMES PRESENTATIONTax is part of CorporateResponsibilty andTax is also set by Laws around theworld
4 7/4/2012 NOVOZYMES PRESENTATIONNovozymes Position on Tax (extracts) “We continuously work to fulfill our tax obligations in the countries where we operate. We seek to obtain a competitive tax level in a fair and responsible way, and with full regard to national and international laws and regulations.” "It is important for Novozymes to make a positive contribution in the countries where we operate. Besides taxes, our economic contributions consist of duties, VAT, employee taxes, employee pension and benefit programs, procurement from local vendors and development of workforce, among others."
5 7/4/2012 NOVOZYMES PRESENTATIONTOTAL TAX CONTRIBUTIONGlobally, Novozymes contributes to society through taxespaid and collected. In 2011, the total tax contribution wasapprox. DKK 1,900 million. Taxes incurred as corporateincome taxes, other taxes, and duties came to approx. DKK925 million. Collected and withheld tax contributions ondividends and wages amounted to approx. DKK 975 million.Novozymes’ overall tax strategy and transfer pricingpolicy support a positive tax contribution to society andgovernments in the countries where Novozymes operates.
6 7/4/2012 NOVOZYMES PRESENTATIONNovozymes Tax Risk Management Novozymes operates in many countries via sales companies & distributors, while production takes place in a few countries. This entails transactions, between Group companies. Novozymes follows the OECD principles in setting prices for these internal transactions, but as this is a complicated area it entails tax risks, among other things because the area is subject to political judgment in each country. Novozymes regularly enters into dialog with tax authorities to reduce the tax risks and, as an example, in 2009 Novozymes was the first company in Europe to enter into a Bilateral Advance Pricing Agreement (BAPA) with China. A BAPA is an agreement between the tax authorities of two countries to determine the split of a company’s profit for taxation between the countries. For Novozymes, an agreement like this creates predictability in relation to taxation. By following the OECD principles we pursue to live up to our desire to pay taxes in a responsible manner in the countries in which we operate.
7 7/4/2012 NOVOZYMES PRESENTATIONPress Release Regarding BAPA with China The BAPA provides 1) Predictability about the companys tax expense 2) Is an ultimate method to ensure that taxes are split between countries in a responsible and fair way
8 7/4/2012 NOVOZYMES PRESENTATIONInformation About Tax in Novozymes’ Annual Report
9 7/4/2012 NOVOZYMES PRESENTATIONInformation About Tax in Novozymes’ Annual Report
10 7/4/2012 NOVOZYMES PRESENTATIONTax Across Borders is Complex Tax structures differ significantly between countries Most countries seek to attract investors through tax incentives Companies operating in several countries are subject to risk of double taxation - despite the DTTs Tax experts often disagree on the interpretation and intention with tax legislation The media often do not present a possible tax story accurately
11 7/4/2012 NOVOZYMES PRESENTATIONWhat is a ”fair” Taxation? Are the OECD’s guidelines fair? Are the individual country’s tax legislation fair? Companies should not pay more taxes than the law prescribes? Does the company comply with national laws?
12 7/4/2012 NOVOZYMES PRESENTATIONThe Existing Disclosure Requirements areSufficientIn view of The national requirements to file tax returns and the tax authorities’ access to companies files The auditors work and their Opinion on Financial Statements The existing comprehensive tax information in the financial statements Country by Country reporting will compromise competitor sensitive informationFurther disclosure requirements is not the way forward
13 7/4/2012 NOVOZYMES PRESENTATIONThe Way Forward? Understand that tax authorities are better positioned to evaluate tax than the public Promote that each country get their proper tax revenue by: Work on getting all countries to adapt the global OECD principles Work on getting all countries to enter into international tax treaties Do not ask for further external reporting from companies that currently comply with the relevant laws
14 7/4/2012 NOVOZYMES PRESENTATIONTax is part of CorporateResponsibilty andTax is also set by Laws around theworld