Tax management, tax strategy and footprint
Tax management and tax strategy
Suominen has a tax policy as well as tax guidelines approved by the Board of Directors. All group companies have to comply with the policy and guidelines. The CFO as well as the Group finance organization are responsible for the overall tax management and planning. Day-to-day local tax management is decentralized within the finance organizations of the subsidiaries in the countries where Suominen operates.
In line with its Code of Conduct, Suominen is committed to operating in a responsible way and to complying with ethically acceptable principles in all its activities. This includes fulfilling all reporting requirements and paying all legally imposed direct, indirect, and other taxes. Suominen aims to fully comply with all statutory requirements and compliance deadlines in the countries where it operates.
Suominen seeks to carry out reasonable and fair tax planning and tax compliance in a manner that enables it to maintain a stable and supportable tax position. When it comes to the Group’s tax obligations, the main target is to identify and acknowledge the fiscal status and obligations of the Group in advance. No artificial tax driven arrangements are carried out and all transactions are business driven.
Suominen’s objective in tax risk management is to avoid retroactive changes to the tax positions it has taken in any of its filings in all the jurisdictions it operates in as well as to avoid retroactive tax payments, interest payments and any tax payment related penalties. Therefore, Suominen’s objective is that it will not take or enter into tax positions which are not considered supportable. However, as Suominen’s objective is also to optimize its tax charge in all jurisdictions it operates, it can be possible that in certain situations Suominen takes or enters into a tax position which is not fully certain. In that case, the uncertain positions are evaluated by considering the risks and rewards related to the tax position. The decision of whether to enter into the uncertain tax position is made based on the risk analysis.
Tax footprint
Suominen’s tax footprint represents the economic impact on society arising from Suominen’s operations in the countries where it operates. Suominen’s business operations result in liabilities to pay taxes and similar payments, as well as in a liability to collect and remit taxes and similar payments that arise purely from the business activities of the group companies.
Suominen’s tax footprint arises purely from the business operations in the countries where it operates and Suominen has not entered into any arrangements aiming to change or rearrange its tax burden from what arises from normal business operations. The trading of goods between Suominen group companies is extremely limited, and basically the group companies sell the products they manufacture directly to the end customer. Due to the business model, Suominen pays corporate income taxes in the countries where the value from its production is created.
The group companies receiving intra-group services are charged a service fee. The pricing of the service fee is in line with the arm’s length principle.
Suominen has companies only in those five countries – Brazil, Finland, Italy, Spain and the United States – where it has both production and sales operations. In respect of taxes and similar payments, Suominen applies the laws and regulations of each country.
The main markets of the Finnish group companies of Suominen are abroad. Due to this, the export sales of these companies significantly exceed their domestic sales. No value added tax is levied on export sales, which leads into a situation where the Finnish group companies’ deductible value added tax on their purchases subject to value added tax is considerably higher than the value added tax they remit based on their taxable sales. As a result, Suominen receives a refund of value added tax in Finland.
Suominen’s tax footprint includes not only the taxes and similar payments that are group companies’ costs but also the taxes and similar payments which the group companies collect and remit, such as indirect taxes. Deferred taxes, which arise from the timing differences between taxation and accounting and are recognized in the financial statements, are not included in the tax footprint.
In 2023, Suominen employed on average 682 people (FTEs) in its operations. As a result, Suominen generated a positive economic contribution to the surrounding society in the form of employees’ income taxes, as well as social security contributions by both the company and the employees. Thus, Suominen’s tax footprint includes also the collected and remitted employees’ income taxes as well as social security contributions, but the employer’s taxes are clearly separated from the employees’ taxes and payments in the report.
Suominen’s corporate income taxes are significantly affected by tax losses generated in certain countries where Suominen operates. Based on local tax laws and regulations, tax losses are normally carried forward and deducted from the taxable profits generated in the future. Suominen is subject to group tax consolidation methods in several countries based on each country’s tax laws and regulations, which effectively means that Suominen’s local companies are taxed on the local consolidated taxable income.
Suominen's corporate income tax paid in Finland is also affected by withholding taxes collected in the country of origin on the taxable income. As the income received is from countries with which Finland has tax treaties to avoid double taxation, these withholding taxes are credited in the Finnish corporate taxation. For this reason, the corporate income tax for 2023 is positive for Finland.
The group companies also pay property and real estate taxes based on the land and buildings they own, environmental and energy taxes as well as different fiscal payments levied, for example, on manufacturing operations. Suominen does not consider these as indirect taxes to be collected and remitted but as taxes that are costs for the group companies.
Certain countries where Suominen operates grant eligible companies tax credits for example in the form of additional depreciation and amortization of assets. The granted tax credits can in some countries be used in offsetting them against different tax or similar payments.
|
EUR thousand |
2023 |
2022 |
||
|
Taxes and similar payments borne |
Finland |
Other countries |
Finland |
Other countries |
|
Corporate income tax, tax on profit |
321 |
-2,195 |
-1,318 |
-3,460 |
|
Property taxes |
-82 |
-1,704 |
-75 |
-1,277 |
|
Employer contributions and taxes |
-1,823 |
-10,338 |
-1,853 |
-10,592 |
|
VAT as expense |
-18 |
-5 |
-20 |
-3 |
|
Custom duties on export* |
- |
- |
- |
-5 |
|
Custom duties on import* |
-286 |
-939 |
-463 |
-1,785 |
|
Excise duties |
-52 |
-378 |
-119 |
-250 |
|
Other taxes and similar payments |
-42 |
-276 |
-40 |
-322 |
|
Received tax credits |
- |
1,134 |
- |
2,659 |
|
TOTAL |
-1,983 |
-14,701 |
-3,888 |
-15,035 |
|
Taxes and similar payments |
Finland |
Other countries |
Finland |
Other countries |
|
Net VAT |
3,498 |
-13,439 |
3,323 |
-6,962 |
|
Payroll taxes and similar |
-3,956 |
-9,513 |
-3,588 |
-9,374 |
|
Withholding taxes on various payments |
-186 |
-153 |
-453 |
-122 |
|
TOTAL |
-644 |
-23,106 |
-718 |
-16,457 |
|
*Custom Duties are borne by the company importing or exporting goods. Custom Duties are not collected and/or paid by some other taxpayer. For these reasons Custom Duties are reported as taxes borne. |
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