INDICATOR: 11.21.5
Tax governance, control and risk management
A. A description of the tax governance and auditing framework, including:
i. the governance body or executive-level position within the organization that is accountable for compliance with the tax strategy,
ii. how the tax strategy is integrated into the organization,
iii. the approach to tax risks, including how they are identified and how the risk is managed and monitored,
iv. how to assess compliance with the tax governance and auditing framework.
B. Description of mechanisms for reporting concerns about unethical or illegal conduct and the integrity of the organization with respect to taxation.
C. Description of the assurance process for tax disclosures and, where applicable, reference to the assurance report, statement or opinion.
Α. Description of the tax governance and auditing framework, which includes:
i. Day-to-day management of tax and customs matters carried out by the competent Senior Group Tax & Customs Director and local experts, when required, to identify and manage tax risks in accordance with the Group’s policies and to monitor frequent changes in the tax and customs framework. Following the tax assessment of all issues and the potential tax impact on the Group Companies, GT&CD takes the necessary measures. The Senior Group Tax & Customs Director reports to the Group Chief Financial Officer (“CFO”), who reports to the Chief Executive Officer (“CEO”) of the Group, and ultimately to the Board of Directors of HELLENiQ ENERGY Holdings SA, the parent company of the Group.
ii. GT&CD provides expert advice, within the Group, and tax and customs-related updates, through relevant analysis from a tax and/or customs perspective. It acts as an internal Tax & Customs consultant for the Group, reviewing all issues, monitoring all legislation and informing all stakeholders in a timely manner with recommendations and guidance, ensuring full tax and customs awareness within the Group.
Through the application of high professional standards, GT&CD ensures that taxes are paid when required, in line with the Group’s clear and firm intention to fully comply with all relevant legislative requirements. We achieve this by:
– acting with integrity, full transparency and optimizing the resources involved
– respecting the statutory obligations / deadlines
– providing training and guidance within the Group, acting as internal tax and customs advisors, taking into account the relationship between tax strategy, business strategy and growth.
iii. We do not engage in any aggressive tax planning in the HELLENiQ ENERGY Group and we always take into account our corporate values and codes. We follow a conservative approach with regard to tax risks and strive to ensure minimum tax risk. Maintaining compliance is of utmost importance and we aim to comply with the spirit and letter of the law in relation to our tax and customs affairs.
Where potential risks are identified, we ensure that appropriate measures are taken to mitigate these risks by reducing risk level to minimum, by taking appropriate actions, such as predictive review of contracts, both with third parties and intra-group, and by utilizing and updating the Group Tax Files (GTF) as a tool for monitoring and auditing for both completeness and compliance with deadlines. If required, we use external consultants to provide tax advice, and additional resources based on the assessments of risks and requirements.
We follow generally accepted risk management principles and best practices applicable to tax and customs, and ensure that these principles are properly communicated, integrated and adapted throughout the organization.
iv. There are various reporting/ audit tools, in accordance with the relevant provisions, and additional ones designed, to assess and monitor compliance and auditing from a tax and customs perspective, within the Group:
Tax Certificates – All Greek companies that fall within the scope of the relevant procedure, undergo a specific audit procedure annually, by their statutory auditors, receiving continuous “unreserved” Tax Certificates, confirming tax compliance for the Group companies, without mentioning either material or even insignificant tax findings. In 2022 the relevant tax certificates, were obtained for 37 Greek liable entities, while another 21 compliance tax notes were obtained for the rest of the Greek entities.
Transfer Pricing files – Local TP files per entity/country are prepared and submitted annually, centrally coordinated by Group Tax & Customs Department. Intragroup transactions are closely monitored using additional valuation assessment through benchmarking analysis. In 2022, 65 relevant files were prepared.
HELLENiQ ENERGY Group TP Masterfile is in line with the framework provided under the OECD Guidelines and the Greek TP rules aiming at achieving consistency and compliance with the said framework.
The Masterfile provides a high level overview of the Group’s business, operations and intercompany transactions (ICTs) and aims to support the documentation according to the Group’s TP policies within the global economic, financial and tax content and it is shared with the Group’s affiliates abroad and if required with the auditors.
External advisors perform a thorough review and support to the Group during the update of the informative sections of each Local TP file, which provides an overview of the relevant affiliates, as well as an analysis of the functions, risks and assets (tangible/intangible) that are relevant to the ICTs of each relevant affiliate and how such functions, assets and risks affect and are allocated between the affiliated counterparties.
International TP files, are submitted in each local language, while they are also prepared in English, to facilitate review centrally at corporate level.
Country by Country Reporting (CbCR) – The Group prepares and submits in a timely manner the CbCR (Country by Country Reporting) tables with the intra-group transactions to the Greek tax authorities (if the Group’s parent entity is incorporated and established in Greece) within the framework of the prescribed CbCR procedure and presents the relevant data for the Group.
For 2022 the report is set out below and covers 10 countries/jurisdictions and 65 legal entities.
The information contained in the CbCR reflects the guidance provided so far by the OECD and the Greek authorities on this issue and is in line with those submitted annually.
The relevant CbCR notifications are submitted to the relevant competent authority on an annual basis. All relevant indicators and data are compiled at country level.
Changes to the applicable relevant laws that provide internal guidelines for all entities and functions are closely monitored and implemented immediately.
B. Description of reporting mechanisms regarding unethical or illegal conduct and the integrity of the organization in relation to taxation
In the framework provided by the relevant Law 4624/2019, Government Gazette A’ 137/29-8-2019, for the transposition of the corresponding EU Directive 2016/680 on the protection of persons who report violations of European Union law, which applies to the Group from the financial year 2024 onwards, there is no specific reference or provision for tax matters.
In this respect, the relevant provisions and the specific framework provided, inter alia, in the Code of Fiscal Procedure and the Customs Code apply.
GT&CD ensures that appropriate measures are taken to mitigate tax risks where necessary, and to reduce the level of risk to a minimum. If required, external advice is sought as well as additional resources based on the assessment of risks and requirements.
To date, no examples of unethical or illegal behavior have been identified, especially in relation to tax and/or customs matters, that would require reporting.
C. Description of the assurance process for tax disclosures and, where applicable, reference to the assurance report, statement or opinion
We have developed appropriate audits and procedures to ensure that they are met accurately and on time:
– If any unintentional tax error is identified, we will report it and take corrective action as soon as possible; and
– We respond with full transparency and integrity to any questions from tax and customs authorities in a timely basis.
All major / significant tax and customs matters are disclosed separately in the respective notes to the Financial Statements, which are also reviewed and approved by the Group’s certified chartered accountants.
Note: The tax data used in the preparation of this Sustainability Report is for 2022, as this is the latest tax data available as of the date of this report.