Elkem Group – our approach to tax

Acceptable levels of tax risk

Elkem has a very low risk tolerance in matters concerning tax. Where tax law is unclear or subject to interpretation, our tax position will always be conservative. We also endeavor to have an open dialogue with tax authorities to avoid taking a tax position which can be deemed risky.   

Risk management and governance

Elkem’s primary tax risk is that of not being compliant with applicable tax laws and regulations and therefore not paying the correct amount of tax. Elkem manages this risk by operating effective tax governance and ensuring tax decisions are made by senior staff with appropriate skills and experience. In addition, Elkem uses third party advisors where necessary to ensure compliance with applicable laws and regulations.

Elkem has a competent and capable finance department where staff have clearly defined roles and responsibilities to ensure compliance with tax requirements. In the event of uncertainty, matters are referred to the Chief Financial Officer or Head of Group Tax who may seek advice from the tax authorities or external professional advisors. Our tax returns are reviewed by our independent external auditors as an additional control to ensure they are correct and comply with all relevant laws and regulations.

The corporate tax function regularly reviews the tax risk in all jurisdictions and reports any findings and issues to the corporate management. Tax risk is also communicated to the audit committee on a regular basis.

A secondary risk for Elkem is the reputational risk of not being in compliance with tax laws and regulations, this includes both the letter and spirit of the law. Elkem is proud of its reputation as a responsible and ethical company and as such does not undertake any form of aggressive tax planning which could diminish this reputation.

Attitude towards tax and tax planning

Elkem takes a conservative approach to tax planning and does not pursue any form of aggressive tax planning arrangements. Our tax affairs are managed in a way that ensures efficiency based on commercial principles.

Elkem aims to be a responsible taxpayer and is committed not to transfer value to low-tax jurisdictions or so-called “tax havens” for the purpose of saving tax. Our current presence in low tax jurisdictions is solely based on economic substance and not for the purpose of reducing tax liabilities.

Within the framework of tax laws and regulations Elkem aims to minimize tax cost in the same way as other costs. We will take advantage of any available incentives or reliefs that exist. However, Elkem commits not to use tools and methods that are knowingly contrary to the intent of the legislation. Tax avoidance through treaty shopping and anti-treaty abuse practice is prohibited in Elkem. All new establishments must pass the principle purpose test (PPT) and limitation on benefits (LoB) as outlines by the BEPS Inclusive Framework. 

Elkem is compliant with transfer pricing regulations and is transparent with tax authorities across all of its locations in this respect. Intra-group transactions are conducted on an arm’s length basis in accordance with OECD principles, local transfer pricing rules and Elkem’s Transfer Pricing Policy, with the aim to pay tax on profits where the business activities are carried out and the value is created. Elkem does not accept the use of Transfer Pricing for tax avoidance or profit shifting in any way and Elkem has procedures in place, including preventing and detecting controls in order to ensure compliance hereof. Elkem performs comparability analysis on a regular basis to ensure a proper pricing and remuneration on intra-group transactions.

Dealing with tax authorities

We seek an open and transparent relationship with all of the tax authorities we deal with. Our dealings shall be undertaken in a timely and professional fashion and we are committed to providing tax authorities with any information they should require in order to comply with tax laws and regulations.

Elkem, as part of a wider multinational entity, comply with the Country-by Country Reporting to facilitate the exchange of information between tax authorities in the jurisdictions where we are present.