Tax Principles

Compliance

Taxes are paid in accordance with all relevant rules and regulations in the countries in which we operate. We aim to comply with both the spirit and the letter of the law. Compliance is monitored through a Tax Control Framework. Additionally, also in managing tax affairs, our employees must adhere to the AkzoNobel Code of Conduct. 

Business rationale

Tax follows business, and profit is allocated to countries in which value is created, in accordance with domestic and international rules and standards (such as the OECD Guidelines) and applying the at arm's length principle.

We do not seek to avoid taxes through “artificial” structures in tax haven jurisdictions.

Relationship with tax authorities

We seek an open and constructive dialog with tax authorities on the basis of disclosure of relevant facts and circumstances. We aim to enhance clarity and upfront certainty around tax. 

Transparency

We are transparent about our approach to tax and our tax position. Disclosures are made in accordance with the relevant domestic regulations, as well as applicable reporting requirements and standards such as IFRS.

In the table below the effective tax rate is shown for the years 2020 and 2021. In the annual report only the effective tax rate for continued operations is shown. As the cash tax paid in the cash flow statement is on a total basis (including discontinued operations), we also show the effective tax rate on a total basis in the table below. 

The above amount of cash taxes paid of €250 million includes €222 million of income tax paid as per the 2021 consolidated statement of cash flows, plus €28 million Dutch dividend withholding tax for the account of AkzoNobel on the executed share buyback program.

The difference between the book tax rate and the amount of tax paid in a given year is mainly caused by the following factors: 

Deferred tax: 

- the creation or usage of tax losses and tax credits

- certain cost or income elements may be included for IFRS results in another year than for taxable results 

Timing differences tax payment:

- the tax liability of a certain year is generally partly paid within the year, and partly in the next year

Taxes borne and paid by AkzoNobel

In the countries where AkzoNobel is operating, we are contributing to society in several ways. We pay to suppliers, employees, capital providers and governments. AkzoNobel can only operate in countries if certain conditions are fulfilled. For example, educated people are needed to run and manage our operations, and a logistical infrastructure is needed in order to transport our goods. By paying to governments, we contribute to the general funds out of which these conditions can be financed.

We provide our country-by-country-report to the tax authorities in the Netherlands, in line with the Base Erosion and Profit Shifting (BEPS) Plan as initiated by OECD and as enacted into Dutch legislation.

Corporate income taxes and withholding taxes borne and paid in 2021 by AkzoNobel worldwide were €250 million.

The following overview shows a breakdown of the 2021 revenue, profit before tax, the taxes borne and paid and the number of AkzoNobel employees for its key countries and regions: