Fair Tax policy
Kendrion strongly believes that pursuing a transparent and honest tax policy is a part of doing business. This is in line with the group’s Code of Conduct. In addition, there is a need to balance the interests of all relevant stakeholders – including customers, local communities, governmental institutions, shareholders – with this.
Tax payments can contribute to local development. In this respect, Kendrion not only pays a substantial amount of corporate income tax in the countries where it does business but is also subject to several other taxes such as VAT, pay-as-you-earn tax deductions (withholding tax), payroll taxes and property taxes. Kendrion believes it has an obligation to pay the amount of tax legally due in any territory.
At the same time, it is in the interest of the company’s continuity and its financial results to optimise its tax position. This too is part of sound business operations. Kendrion also has a responsibility in this respect to its shareholders to enhance shareholder value. The commercial needs of Kendrion, however, remain paramount and all tax planning is undertaken in this context. All transactions must have a business purpose and/or commercial rationale: ‘tax follows business’. In addition, consideration is also given to Kendrion’s reputation and to its corporate and social responsibilities.
Another important aspect of Kendrion’s tax policy is to effectively manage risk and to comply with all applicable tax laws, rules, regulations and disclosure requirements. The aim is to comply with the letter as well as the spirit of the law. Kendrion makes use of the services of accredited tax advisers at both local and group levels and has included tax compliance in its internal audit programme. It goes without saying that in cases where (the interpretation of) the tax law is unclear, the optimal and most legally defensible position is taken. If necessary and feasible, tax authorities will be consulted in advance for additional certainty. Kendrion’s aim in this is to be open and transparent towards all authorities and to act with total integrity. Compliance with all anti-bribery legislation is safeguarded and is part of internal trainings. Kendrion's tax policy is discussed with the Audit Committee of the Supervisory Board from time to time.
Transactions conducted between group companies located in different countries are conducted in line with the OECD Guidelines for Multinational Enterprises and other local transfer-pricing regulations. The company uses the Master File concept for transfer-pricing purposes to ensure that coherent and up-to-date principles are applied.
Kendrion is aware of the ongoing OECD BEPS developments in areas including treaty abuse, transfer pricing and country-by-country reporting. Given that Kendrion’s tax position corresponds to the geographical spread of the operations and that no aggressive tax structures are employed involving the movement of funds through secrecy jurisdictions (tax havens), the company believes that the impact of these developments is limited. Furthermore, even though Kendrion understands the tendency to use country-by-country reporting to gain more insight into local tax contributions, it has been decided, from the viewpoint of overall competitiveness, not to introduce this particular kind of reporting at this stage.
In 2016, Kendrion was given the no. 2 ranking in the Dutch Tax Transparency benchmark for small cap companies and ranked no. 7 among all 68 listed companies included in the benchmark.