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
VATView entire presentation