Uponor to pay €3.2 million in back taxes; intends to appeal against decision
Uponor Corporation Stock exchange release 23 December 2011 15:45 EET
In summer 2008, a tax audit of some of Uponor Group’s Finnish companies was performed for the years 2004–2007. On the basis of their final report, the tax authorities have now issued an additional taxation decision concerning the year 2005. It obliges Uponor to pay approximately €3.2 million in additional taxes and penalties, due in January 2012.
Uponor intends to appeal against the decision and submit a request for rectification to the Board of Adjustment. The tax authorities have not yet issued additional taxation decisions on the remaining years, in view of the audit conducted in 2008. Their effects will be evaluated in due time, pending on a decision by the tax authorities.
The dispute mainly pertains to market-based transfer pricing of the company’s internal service charges, related to the Finnish subsidiary, Uponor Business Solutions Oy, which offers services associated with the implementation, maintenance and development of the Group's common information systems. In this context, Uponor has applied the OECD's transfer pricing guidelines, charging a service fee to companies once they have started using such systems, not to all Group companies as the tax authorities suggest.
The main part of the sum demanded by the tax authorities – i.e. approximately €1.9 million – consists of taxes whose payment should, in Uponor’s view, be scheduled over a longer time, in tandem with the IT system’s implementation. The remaining €1.3 million represents interest on delayed payments and surtaxes. Uponor will book the interest and surtaxes in the company’s financial statements for 2011.
Riitta Palomäki, Uponor CFO, is disappointed in the tax authorities’ decision, saying:
‘We have tried to assist the tax authorities in understanding the operations and business model of our service company by all means available. Their approach as outlined in the decision will affect our decisions on where to locate such service units in future.’
For further information, please contact:
Riitta Palomäki, CFO, tel. +358 20 129 2822
Vice President, Communications
Tel. +358 20 129 2852
NASDAQ OMX - Helsinki
Uponor is a leading international provider of plumbing and indoor climate solutions for residential and commercial building markets across Europe and North America. In Northern Europe, Uponor is also a prominent supplier of infrastructure pipe systems. Uponor offers its customers solutions that are technically advanced, ecologically sustainable, and safe and reliable to own and operate. The Group employs approx. 3,200 persons, in 30 countries. In 2010, Uponor's net sales totalled €750 million. Uponor Corporation is listed on NASDAQ OMX Helsinki in Finland. http://www.uponor.com.