TAX STRATEGY

KONE has operations in over 60 countries and collaborates with authorized distributors in over 80 countries around the world. As a global corporate citizen, we are fully committed to paying the correct amount of tax at the right time, on the profits we make, and in the countries where we create value that generates those profits.

Our objective is to ensure predictability in all tax matters and every transaction must have a solid business rationale. We also support competitive business growth in a most tax efficient manner without compromising tax compliance principles.

Our biggest challenge is to ensure that we pay tax only once on the profits made. Therefore, we have adopted a set of global tax principles covering transfer pricing and relationships with local tax authorities. We want to ensure that our transfer pricing is driven by the activities undertaken and the value created in each part of our business. We also seek to develop mutually respectful relationships with national tax authorities based on transparency and trust to enhance predictability. These principles of integrity reflect good corporate practice in the area of tax management.

KONE’s tax function (Corporate Tax Team) is part of our Finance function, which reports to the Chief Financial Officer.

The Corporate Tax Team is accountable and responsible for the Group’s tax positions and group-level tax planning, as well as setting tax policies, controls and instructions on tax matters. It is also responsible for KONE’s global transfer pricing model and legal structure. The tax function is organized on a global basis, ensuring that we have consistent tax policies, strategies and processes.

Local finance teams (headed by local Finance Directors/Managers) are accountable and responsible for the tax compliance of the local entities to be carried out in accordance with the guidelines and instructions issued by the Group. The main tasks and responsibilities have been determined in the Tax Financial Control Model.

External advise is sought in relation to areas of complexity or uncertainty to support the Group in complying with its tax strategy.

Taxes are always a consequence of business operations. On the other hand, we must ensure that all business decisions also consider the financial and tax impact of the plan as well as the potential tax and reputational risks.

We follow “the more likely than not” principles for making decisions on tax matters. The plan and the support for decision making should also be documented sufficiently for tax compliance purposes.

We have a global transfer pricing model in place according to the OECD guidelines and it is implemented consistently within the Group. The Corporate Tax Team is continuously evaluating the transfer pricing model, to ensure its alignment with the business model on a continuous basis.

As stated above, we are fully committed to paying the correct amount of tax at the right time. In order to achieve this, we operate an effective tax control framework to identify key tax risks and to manage those tax risks through appropriate policies, controls and processes, ensuring compliance with all relevant laws and regulations and maintaining accounting systems and controls sufficient to support tax compliance obligations.

The location of our group entities is driven by business reasons, such as the location of the customers, suppliers, raw materials and know-how. We insist on transparency in all our activities, including our relationship with tax authorities. Our policy is also to be proactive in fostering good relationships with tax authorities and undertaking all such issues in a professional and timely manner.

In accordance with the principles above, our approach is to promote enhanced co-operation/horizontal monitoring arrangements with the tax authorities, where possible. We deal transparently, professionally and appropriately with all tax authorities. This way of working also helps us with our goal of reaching predictability on tax matters.