Arla Foods Consolidated Annual Report 2021 slide image

Arla Foods Consolidated Annual Report 2021

62 Arla Foods Consolidated Annual Report 2021 / Management Review / Responsible and transparent tax practices RESPONSIBLE AND TRANSPARENT TAX PRACTICES In Arla, we acknowledge that tax is vital for the economic and social development. Conforming with our Code of Conduct and Good Growth identity, we are strongly committed to paying our taxes legally due and reporting transparently on our tax practices. 125 EURM Contents remained in Arla 8,956 farmers 20,617 employees 1.5 million cows III Taking a responsible and transparent approach to tax matters supports the strategy of growing our company on a solid foundation and is in line with our commitment to the UN Sustainable Develop- ment Goals (SDGs). Our tax payments contribute directly and indirectly to the majority of the SDGs, but in particular to SDG number 16 - development of effective, accountable and transparent institutions. We are committed to paying taxes in the countries where we operate and generate value as well as ensuring that requirements on tax reporting and tax transparency are met. We strive for an open dialogue with tax authorities and the general public around the world regarding our business and our tax affairs. Our key tax principles Our approach to tax matters conforms with Arla's global Code of Conduct and is founded on a set of key tax principles approved by our Board of Directors: • Arla aims to report the right and proper amount of tax according to where value is created • Arla is committed to pay taxes legally due and to ensure compliance with legislative requirements in all jurisdictions in which the business operates • Arla does not use tax havens to reduce the group's tax liabilities • · • Arla will not set up tax structures intended for tax avoidance which have no commercial substance and do not meet the spirit of the law Arla is transparent about our approach to tax and our tax position. Disclosures are made in accordance with relevant regulations and applicable reporting standards such as Interna tional Financial Reporting Standards (IFRS) Arla builds on good relations with tax authorities and trusts that transparency, collaboration and proactiveness minimise the extent of disputes In order to always adhere to our key tax principles, our global tax function is organised to ensure that we have the right policies, people, tax controls, and procedures in place to promote strong tax governance. Cooperative and corporate tax As a cooperative, Arla's farmer owners are also our suppliers, and earnings are not accumulated in the company but paid to the farmers in the form of the highest possible milk price. Based in Denmark, Arla Foods amba is governed by the Danish tax rules for cooperatives paying income tax in Denmark based on the value of its equity. Arla operates several subsidiaries globally. Our subsidiaries are primarily limited liability and private limited companies subject to regular corporate taxation. Transactions between Arla companies are determined and documented in accordance with OECD's Transfer Pricing Guidelines to ensure we operate on market terms. Value generation In 2021, Arla generated a total value of approxi- mately EUR 5.6 billion* from the milk supplied. Milk from our farmer owners generated EUR 5.0 billion in milk payments, while other farmers received milk payments of EUR 461 million leaving EUR 125 million in Arla. As a result, the majority of the taxes are paid at farm level subject to local tax rules. Moreover, the value generated by our activities further cascades into societies via various types of tax payments, both direct and indirect taxes that are either born or collected by the Arla group It is our ambition to continuously increase transparency and reporting details on our total tax contributions in the countries and societies in which we operate and, in this respect, implement the EU Directive on public country-by-country reporting by 2024 at the latest. Society 5.0 billion EUR paid to farmer owners Our Farmers Corporate taxes Cooperative taxes Customs and Duties Personal taxes VAT
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