Tax principles we follow

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.


Tax update 2021

Effective tax rate and Cash tax rate 

The reported effective tax rate (ETR) for the year 2021 is 22.3%. The weighted average statutory income tax rate based on the geographic spread of AkzoNobel’s activities is 25.2%. The difference between this statutory rate and the effective rate is explained in the following table:

2020

25.0

2021

25.0

2020

(0.4)

2021

0.2

2020

24.6

2021

25.2

2020

(1.8)

2021

(3.0)

2020

2.4

2021

2.3

2020

(0.1)

2021

(1.6)

2020

0.6

2021

0.9

2020

0.2

2021

(3.3)

2020

0.3

2021

1.8

2020

26.2

2021

22.3

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. 

2020 in € millions

919

2021 in € millions

1,105

Calculated average in € millions

1,012

2020 in € millions

(241)

2021 in € millions

(246)

Calculated average in € millions

(244)

2020 in € millions

26.2%

2021 in € millions

22.3%

Calculated average in € millions

24.1%

2020 in € millions

920

2021 in € millions

1,113

Calculated average in € millions

1,017

2020 in € millions

(249)

2021 in € millions

(248)

Calculated average in € millions

(249)

2020 in € millions

27.1%

2021 in € millions

22.3%

Calculated average in € millions

24.4%

2020 in € millions

(187)

2021 in € millions

(250)

Calculated average in € millions

(219)

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:

Revenue by origin

445

Profit before tax

348

Taxes paid / (received)

28

Number of employees (FTE)

2,400

Revenue by origin

1,034

Profit before tax

68

Taxes paid / (received)

1

Number of employees (FTE)

3,000

Revenue by origin

393

Profit before tax

20

Taxes paid / (received)

6

Number of employees (FTE)

1,400

Revenue by origin

495

Profit before tax

23

Taxes paid / (received)

4

Number of employees (FTE)

1,200

Revenue by origin

376

Profit before tax

7

Taxes paid / (received)

24

Number of employees (FTE)

1,200

Revenue by origin

301

Profit before tax

35

Taxes paid / (received)

12

Number of employees (FTE)

600

Revenue by origin

389

Profit before tax

14

Taxes paid / (received)

6

Number of employees (FTE)

900

Revenue by origin

1,389

Profit before tax

102

Taxes paid / (received)

44

Number of employees (FTE)

4,400

Revenue by origin

1,045

Profit before tax

59

Taxes paid / (received)

-3

Number of employees (FTE)

2,600

Revenue by origin

329

Profit before tax

45

Taxes paid / (received)

17

Number of employees (FTE)

1,700

Revenue by origin

1,431

Profit before tax

161

Taxes paid / (received)

39

Number of employees (FTE)

5,900

Revenue by origin

1,087

Profit before tax

59

Taxes paid / (received)

35

Number of employees (FTE)

4,600

Revenue by origin

724

Profit before tax

146

Taxes paid / (received)

33

Number of employees (FTE)

2,400

Revenue by origin

149

Profit before tax

17

Taxes paid / (received)

4

Number of employees (FTE)

500

Revenue by origin

9,587

Profit before tax

1,105

Taxes paid / (received)

250

Number of employees (FTE)

32,800

* Dutch dividend withholding tax for account of AkzoNobel on the executed share buyback program.

The taxes borne and paid include corporate income tax and withholding tax paid in 2021. This may include tax payments or refunds relating to previous years, whereas taxes and refunds related to the year 2021 may only have a cash impact in future years. The withholding tax is reported by the countries to which the taxes were paid.

The corporate income tax paid in a given year can be lower or higher than the statutory rate in a country due to, among others, deferred tax differences relating to timing differences between tax law compared to accounting standards, carry forward of tax losses and/or tax credits, prior year true ups, timing differences in payment and/or refunds. 

Besides the indicated taxes, AkzoNobel also pays and bears other taxes like custom duties, property taxes, sales taxes and environmental/energy taxes. These taxes are not included in the overview above. Furthermore, the presence of AkzoNobel within countries also leads to other material tax revenues than those that are borne by AkzoNobel, like the tax withheld from customers (VAT) and employees (wage tax).