Annual Report 2014

Tax footprint 2014

In its tax footprint reporting, Posti adheres to the country-specific tax reporting guidelines for companies of which the state is the majority shareholder, provided by the Ownership Steering Department on October 1, 2014.

Tax strategy

All companies in the Group have committed to operating responsibly and to meeting all obligations and requirements defined by the valid legislation of each country. All taxes are to be paid on time without delay. The Group’s long-term target is to ensure that the Group’s effective tax rate is at the same level as the corporate income tax rate valid in Finland at each particular time.

Posti does not practice tax planning that would aim at artificially decreasing the Group’s taxable income. In tax-related issues, the Group operates within the framework of legislation and legal practice in planning the taxable profit of Group companies. This can include the utilization of tax losses accrued in a subsidiary or the granting of group contributions, for example. To clarify taxation practices, some situations may involve contacting the tax authorities for either verbal guidance or a written decision on the taxation treatment of the planned action. Tax risk management is part of the Group’s risk management process.

Management of tax-related issues

The management of tax-related issues is centralized to the Group Finance unit, which is responsible for managing and monitoring tax-related issues at the Group level. Decisions related to taxation are made at the Group level. Significant matters of principle are presented to the parent company’s Board of Directors for decision-making. The Group’s CFO reports regularly on taxation-related issues to the Group’s Audit Committee. The key task of the management of tax-related issues is to ensure that all Group companies comply with the regulations of tax legislation in all countries of operation.

Principles observed in tax reporting

The information presented in this report is based on information collected from the Group’s accounting systems. Taxes refer to taxes or tax-like fees paid to public sector entities, whether they are paid or remitted by the company. The nature and amount of taxes vary significantly from country to country. Taxes paid refer to taxes paid by the Group companies which are, as a rule, expensed in the company’s financial statements. Taxes remitted refer to taxes or fees collected by the companies which are remitted to tax collectors, often on behalf of parties other than the company itself.

Group’s tax footprint reporting concerns only relevant countries, and based on that, country-specific numbers are only reported for Finland and Russia. More than 82% of the Group’s net sales comes from these countries. According to the Group’s strategy, these countries are its main markets. Other operating countries are grouped under Scandinavia and Other countries. Posti also uses the same geographical categorization in its consolidated financial statements.

For other countries than Finland and Russia, information is presented on a country group-specific basis as the information reported is not of material importance and on the other hand its presentation by country might jeopardize the non-disclosure of confidential information, such as customer or pricing details. From the Group’s perspective, the amount of information reported is not of material importance when the taxes payable for an individual country do not exceed EUR 5 million.

The Group operates in 11 countries. In addition, Posti has several companies in countries where the Group no longer has business operations. When assessing the materiality threshold, net sales of EUR 1 million for each individual subsidiary is considered the threshold for non-materiality. Non-material companies are excluded from the reporting, as the amount of taxes paid by the companies is minor in proportion to the figures disclosed by the Group. These companies are in the categories Scandinavia and Other countries.

Changes in Group structure during the financial period are described in more detail in the Group’s financial statements release.

 

MEUR

Finland

Russia

Scandinavia

Other countries

Net sales

1,359

172

212

117

Result before taxes

77

8

-21

1

Number of personnel

18,033

3,063

656

1,400

Paid taxes

32

11

6

3

Remitted taxes

306

18

13

6

Received public support

0

0

0

0

         
         

In 2014, Group's effective tax rate was 3.4% (2013: 418.2%). The effective tax rate was significantly affected by changes in deferred tax assets and liabilities on the balance sheet during the financial period. The Group’s parent company received a significant amount of dividends from subsidiaries that are exempt from tax in Finland. These dividends came from subsidiaries in the Other countries category. The amount of income taxes paid in Finland by the Group was significantly reduced from the previous year due to the weaker operating result.

 

Taxes by category and by geographical area


Paid taxes, MEUR

Total

Finland

Russia

Scandinavia

Other countries

Income taxes

2

1

1

0

0

Real estate taxes

4

3

2

0

0

Employer taxes

30

12

9

6

3

Environmental taxes

14

14

0

0

0

      

Remitted taxes by category and by geographical area


Remitted taxes, MEUR

Total

Finland

Russia

Scandinavia

Other countries

Value added taxes

197

178

13

4

2

Salary taxes

145

127

5

9

4