Fortum publishes already its 10th tax footprint report

This year, Fortum celebrates its 10th annual tax footprint report on the 17th March. Over the years, our tax footprint report has developed into a report that sets the standard for corporate tax transparency.

Decorative picture of a bridge

Fortum has disclosed its tax footprint since 2012. During the last decade, much has happened in our tax reporting partly due to legislative changes, but mostly because we seek to be open and transparent in our operations, especially when it comes to taxation. This progress is visualised in the chart below.

Our first tax footprint report published in 2012 was a two-page report and, in fact, simply a section under Fortum’s Sustainability report. Country-by-country reporting (CbCR) included six separate countries: Finland, Sweden, Russia, Norway, Poland and Estonia. In 2012, the report already included a list of companies operating under CFC (controlled foreign company) rules and information on tax appeals.

Now, ten years later, Fortum publishes a separate 22-page tax footprint report, and we have done so ever since 2015. In the current report, CbCR includes all EU countries that Fortum has operations in and non-EU countries. On top of numbers on our total tax contribution, we have a narrative over each country explaining main outlines of the CbCR details as well as CFC information.

Moreover, today’s report includes important sections that explain the roles and responsibilities within our tax practice, the organisation related to tax topics and the tax policy approved by Fortum’s Board of Directors. The report openly assesses tax risks and analyses our value chain, value creation and tax footprint, and includes a description of material court processes related to taxes.

Path of Fortum's tax footprint 2012–2022

The tax footprint report improves the transparency of our operations

Clearly communicating the principles and governance around tax matters, supported by sufficient data about our tax contribution, enables our stakeholders to assess and understand what type of taxpayer we are and what our contribution to society is. This is exactly why we are investing in our tax footprint report.

Tax footprint reporting is voluntary for companies. We report our business income following local rules and requirements. In addition, we take many other aspects into consideration, including our corporate social responsibility and financial impacts. We are of course particularly aware of our reputation among a wider population of stakeholders. For these purposes, we are committed to responsible tax management and transparent reporting.

Fortum’s tax principles

There are specific principles that steer our Group’s tax management. In short, the six taxation principles we follow relate to governance, compliance, business structure, planning, relationships with others and reporting.

Governance refers to the chain of command in relation to taxation. Our tax principles have been approved by our Board of Directors. Fortum’s Chief Financial Officer (CFO) is finally accountable for the tax governance and tax strategy, whereas Fortum’s VP is responsible for ensuring that the tax principles are implemented and that supporting procedures are in place and guidance is available. Our VP Tax is supported by a team of corporate tax professionals. Tax issues, such as tax strategy, legal processes and tax-related risks, are followed on a regular basis by the Audit and Risk Committee of Fortum’s Board of Directors.

Compliance refers to the consistent compliance processes we have in place to ensure that regulations are followed in all parts of our operations and that the correct amount of tax is paid at the right time in the countries in which we operate. Compliance means that we respect existing regulations, such as the market-based pricing of internal transactions (the arm’s length principle), and comply with reporting obligations, such as the mandatory disclosure rules.

We only use business structures that are driven by commercial considerations, are aligned with business activity, support our fundamental financial positions and have genuine substance. Fortum does not seek abusive tax results. Furthermore, we have a process to eliminate tax fraud.

Tax planning ensures the predictability of our business and its tax treatment. This means that we pay tax on our profits where the profits are generated and avoid double taxation. We respect the purpose of the law in our planning.

We engage with governments and tax authorities to explain the impacts their tax policies and regulations have on us. Moreover, we discuss with various organisations, such as industry groups and EU bodies, the law proposals and regulations which are relevant for us and help us promote responsible taxation. When there are adverse consequences for our ability to run our businesses efficiently and to invest, we will initiate a dialogue and explain this to governments and administrations.

Finally, stakeholders should understand our tax position and contribution. Here, our tax footprint report and financial reporting play a pivotal role.

Code of conduct

Our tax principles and governance

More information:

Reijo Salo

Reijo Salo

Vice President, Corporate Tax
reijo [dot] k [dot] salo [at] fortum [dot] com