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2016-11-07

Nokian Tyres: Nokian Tyres tax dispute proceeds. The Company is now finally in position to appeal to the Administrative Court

Nokian Tyres plc Stock Exchange Release November 7, 2016, 3.00 p.m.

The Board of Adjustment of the Finnish Tax Administration held the
reassessment decision from the Tax Administration unchanged related
to additional taxes EUR 62.8 million but decreased the amount of
punitive tax increases and interests from EUR 31.3 million to EUR
26.4 million concerning tax years 2007-2010. The decision of the
Board of Adjustment was not unanimous.

The Company has already recorded the 2007-2010 total additional taxes
of EUR 94.1 million in full to the financial statement and result of
year 2015 based on the Tax Administrations decisions December 2015
and January 2016.

The Company considers the decision unfounded and appeals against it by
leaving the claim to the Administrative Court.

The ruling of The Board of Adjustment of the Finnish Tax
Administration does not affect the Company's dividend policy. The
ruling has no effect on the Nokian Tyres Group's guidance: In 2016,
with the current exchange rates, net sales and operating profit are
expected to remain at the same level compared to 2015.

If the claim does not lead to annulment of the tax decision, the
Group's corporate tax rate is expected to rise in the next 4 years,
from the previously announced 17 per cent to maximum 22 per cent.

Background of the tax dispute

Large Taxpayers' Office carried out a transfer pricing tax audit
regarding tax years 2007-2011, investigating if the intercompany
transactions between Nokian Tyres plc and its subsidiaries were
concluded based on market prices. Reassessment decision regarding
year 2011 has not been received yet and the latter years are still
unaudited. Reassessment decisions concerning tax years 2007-2010
(company's releases 30 Dec 2013 and 21 Jan 2014) contained EUR 100.3
million of additional taxes, including penalties and interests, which
the Company recorded in full to the financial statement and result of
year 2013.

The Company appealed to the Board of Adjustment of the Finnish Tax
Administration, which annulled the additional payable tax imposed by
the Tax Administration and returned the matter back to the Tax
Administration for reprocessing (company's release 7 April 2015).

In December 2015 and January 2016, the Company received renewed
reassessment decisions from the Tax Administration, according to
which the Company was obliged to pay EUR 94.1 million in additional
taxes with punitive tax increases and interest concerning tax years
2007-2010. The Company paid the amount in January 2016. The Company
recorded EUR 94.1 million in full as expenses in the financial
statement and result for 2015.

Tax Administration states in the reasoning of its decision concerning
2007-2010, that the transfer pricing was at arm's length with all
others but the Russian subsidiaries. They have ignored the modern and
efficient production plant in Russia combined with the sales and
logistic network covering whole Russia as basis for success of the
Nokian Tyres Group's Russian business. Tax Administration considers
the Russian plant as a low risk contract manufacturer. The Tax
Administration has ruled that a significant part of the Russian
subsidiaries' profits should be added to Nokian Tyres' taxable income
in Finland. In practice this leads to double taxation of income,
which is contrary to existing tax treaty.

Nokian Tyres to appeal against the decision

The Company's transfer pricing has been at arm's length as provided by
Finnish laws and the OECD Transfer Pricing Guidelines. No appropriate
grounds to justify the disregarding of the Company's transfer pricing
documentation has been presented. The decision of the Board of
Adjustment of the Finnish tax Administration is also based on the
so-called re-characterization of legal transactions in the sense
rejected by the Supreme Administrative Court.

Nokian Tyres plc considers the decision by the Board of Adjustment of
the Finnish Tax Administration unfounded and appeals against it to
the Administrative Court. If needed, the Company will also require
the competent authorities to negotiate on the elimination of the
double taxation. The Company has initiated a separate process for
evaluating the legitimacy of the procedures used in the tax audit by
Tax Administration and tax inspectors.

Nokian Tyres plc

Antti-Jussi Tähtinen
VP, Marketing and Communications

Further information:
Anne Leskelä, CFO, tel: +358 10 401 7481

Distribution: Nasdaq Helsinki Ltd, media, www.nokiantyres.com

Nokian Tyres is the world's northernmost tyre manufacturer. The
company promotes and facilitates safe driving in demanding
conditions. It supplies innovative tyres for cars, trucks and special
heavy machinery mainly in areas with special challenges on tyre
performance: snow, forests and harsh driving conditions in different
seasons. Nokian Tyres' product development is consistently aiming for
sustainable solutions for safety and the environment, taking into
account the whole life cycle of the tyre. A part of the Nokian Tyres
group, the tyre chain Vianor has 1,494 outlets in 26 countries. In
2015 Nokian Tyres had approximately 4,400 employees and net sales of
approximately 1,4 billion euros. Nokian Tyres' share is listed on the
Nasdaq Helsinki. Further information: www.nokiantyres.com

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