Tax Strategy & Policy
KPN’s Board of Management oversees KPN’s taxation and tax compliance as a core part of corporate responsibility and governance. At all times, we respect the spirit of the law. Where alternative routes exist to achieve the same commercial results, KPN will pursue the most tax efficient and responsible approach in the interest of all stakeholders, while remaining compliant with all relevant laws, regulations and international standards. KPN’s tax policy, which has been approved by KPN’s Board of Management, provides the guiding principles to exercise this tax strategy.
KPN’s Tax Policy is embedded in 5 pillars; Compliance, Relationship with tax authorities, Transparency, Accountability & Governance, Business rationale & transfer pricing.
We commit ourselves to behave responsibly at all times which is integral to ensuring the long-term sustainability of our business. We act in accordance with applicable tax laws and regulations and are guided by relevant international standards, for example OECD (Organization for Economic Cooperation and Development) Guidelines. Where tax laws do not give clear guidance, prudence and transparency shall be the guiding principles. We prepare and file all tax returns required, providing complete, accurate and timely disclosures to all relevant tax authorities. We also expect our tax advisors to take into account these guiding principles.
Relationship with tax authorities and other stakeholders
We seek to maintain an open, honest and constructive dialog with tax authorities based on transparency, respect and trust. Consequently we disclose all relevant facts and circumstances. In The Netherlands this is embedded in Enhanced Supervision (‘horizontal monitoring’) where we aim to enhance clarity and upfront certainty around tax. To this end, we engage proactively with the Dutch tax authorities. We meet on a regular basis to ensure that our business dealings are better understood and to exchange views and insights on various (tax) matters. This open, two-way communication enables us to minimize uncertain tax positions.
We believe that transparency is a cornerstone of good tax governance. We support global initiatives of the OECD to promote tax transparency and responsible tax management.
We fulfil our disclosure obligations and are transparent to tax authorities. We regularly put forward understandable and timely public communication about our approach to tax, our tax position, and total tax payments on a country-by-country basis.
We engage in a regular dialogue with stakeholders like NGO’s and interest groups and welcome constructive debate on taxation. We aim to show good corporate citizenship in the way we handle tax issues and communicate clearly about our strategy and policy on tax governance.
Accountability & Governance
KPN’s Board of Management is accountable for the tax strategy. KPN’s Corporate Tax Department is the focal point on all tax related matters and responsible for tax risk management. KPN’s Corporate Tax Department consists of well-educated and adequate staff of tax professionals who are in constant dialogue with KPN´s senior management and KPN´s business. This ensures that KPN´s (senior) management is engaged and involved in all relevant tax matters. Within KPN we adhere to our Code of Conduct ensuring our accountability and Governance. Our Tax Policy is in line with our Code of Conduct. On a quarterly basis KPN’s Corporate Tax Department reports to the Board of Management on adherence to our Tax Policy, which is also overseen by Internal Audit and Risk & Compliance.
Business rationale & transfer pricing
Tax is one of the elements we take into account in our commercial and economic activities. Tax follows the business and profits are allocated to the countries in which business value is created. We have clear procedures in relation to tax risk management and carry out risk assessments as part of any tax planning on significant transactions. We do not enter into aggressive and contrived tax planning structures. We therefore do not use secrecy jurisdictions or so-called ‘tax havens’ for tax avoidance, nor artificial tax structures that have no commercial or operational substance. Our Corporate Tax Department is aligned with the business and is not a profit centre by itself. KPN may engage in tax planning initiatives and make use of incentives promoted by government authorities but due consideration needs to be given to KPN’s legitimate interests, reputation and corporate social responsibility. We aim for certainty on tax positions, but where tax law is unclear or subject to interpretation, we evaluate the likelihood and where appropriate seek an external opinion, to ensure that our position would, more likely than not, be upheld. In doing so, we take due care of a sustainable relationship with relevant tax authorities.
As we ensure that our transfer pricing policies comply with applicable internationally agreed and recognized principles as outlined in the OECD guidelines, we report income in the countries where the value is created applying the arm’s length principle.