Mads Bodenhoff, Novo Zymes: CSR & Tax

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21 June 2012

IBIS Conference CSR & TAXMads Bodenhoff, Vice President Finance

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Whom are the Stakeholders

NOVOZYMES PRESENTATION2 04/12/2023

Reference - www.internationaltaxreview.com

Universities & Business Schools

Journalists

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Tax is part of Corporate Responsibilty and Tax is also set by Laws around the world

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Novozymes Position on Tax (extracts) “We continuously work to fulfill our tax obligations

in the countries where we operate. We seek to obtain a competitive tax level in a fair and responsible way, and with full regard to national and international laws and regulations.”

"It is important for Novozymes to make a positive contribution in the countries where we operate. Besides taxes, our economic contributions consist of duties, VAT, employee taxes, employee pension and benefit programs, procurement from local vendors and development of workforce, among others."


TOTAL TAX CONTRIBUTION


Globally, Novozymes contributes to society through taxespaid and collected. In 2011, the total tax contribution wasapprox. DKK 1,900 million. Taxes incurred as corporateincome taxes, other taxes, and duties came to approx. DKK925 million. Collected and withheld tax contributions ondividends and wages amounted to approx. DKK 975 million.Novozymes’ overall tax strategy and transfer pricingpolicy support a positive tax contribution to society andgovernments in the countries where Novozymes operates.



Novozymes Tax Risk Management


Novozymes operates in many countries via sales companies & distributors, while production takes place in a few countries. This entails transactions, between Group companies. Novozymes follows the OECD principles in setting prices for these internal transactions, but as this is a complicated area it entails tax risks, among other things because the area is subject to political judgment in each country.

Novozymes regularly enters into dialog with tax authorities to reduce the tax risks and, as an example, in 2009 Novozymes was the first company in Europe to enter into a Bilateral Advance Pricing Agreement (BAPA) with China. A BAPA is an agreement between the tax authorities of two countries to determine the split of a company’s profit for taxation between the countries. For Novozymes, an agreement like this creates predictability in relation to taxation.By following the OECD principles we pursue to live up to our desire to pay taxes in a responsible manner in the countries in which we operate.



Press Release Regarding BAPA with China


The BAPA provides1) Predictability about the company's tax expense2) Is an ultimate method to ensure that taxes are split between countries in a responsible and fair way



Information About Tax in Novozymes’ Annual ReportNOVOZYMES PRESENTATION8 04/12/2023



Information About Tax in Novozymes’ Annual Report




Tax Across Borders is Complex


Tax structures differ significantly between countries Most countries seek to attract investors through tax

incentives Companies operating in several countries are subject to

risk of double taxation - despite the DTTs Tax experts often disagree on the interpretation and

intention with tax legislation The media often do not present a possible tax story

accurately



What is a ”fair” Taxation?


Are the OECD’s guidelines fair? Are the individual country’s tax legislation fair? Companies should not pay more taxes than the law

prescribes? Does the company comply with national laws?



The Existing Disclosure Requirements are Sufficient


In view of

The national requirements to file tax returns and the tax authorities’ access to companies' files

The auditor's work and their Opinion on Financial Statements The existing comprehensive tax information in the financial

statements Country by Country reporting will compromise competitor

sensitive information

Further disclosure requirements is not the way forward



The Way Forward?


Understand that tax authorities are better positioned to evaluate tax than the public

Promote that each country get their proper tax revenue by: Work on getting all countries to adapt the global OECD principles Work on getting all countries to enter into international tax treaties

Do not ask for further external reporting from companies that currently comply with the relevant laws



Tax is part of Corporate Responsibilty and Tax is also set by Laws around the world

Economy & Finance

Mads Bodenhoff, Novo Zymes: CSR & Tax