KSB Limited Tax Strategy for the United Kingdom
1. Introduction
The KSB Group is one of the leading producers of pumps, valves and related service offerings. More than 15,000 employees around the world work for maximum customer satisfaction. The activities of the KSB Group are organised in three business segments based on product groups: Pumps, Valves and Service. KSB pumps and valves are used in a variety of applications where fluids need to be transported or reliably shut off. With their products, the Group companies serve customers across several market areas, including general industry, chemical and petrochemical industries, energy, construction/ building services, water and wastewater management and mining. The top-selling markets worldwide are the industrial, water and wastewater service providers and energy supply sectors.
This strategy applies to KSB Limited, a UK entity wholly owned by German Group parent KSB SE & Co. KGaA. Our UK tax strategy satisfies the requirements of paragraph 22(5) of Schedule 19 of the UK Finance Act 2016 and is applicable to the fiscal year and accounting period of KSB Limited, January 1st to December 31st, 2023.
It is our aim to strive for full compliance with all statutory obligations, internationally recognised standards and full disclosure to the tax authorities. KSB Group tax is managed in line with KSB’s overall ethics and corporate values. We have established a global corporate culture centring on professionalism, honesty and responsibility.
2. Our approach to risk management and governance arrangements in relation to UK taxation
We are committed to operating an effective risk management and governance framework, with tax as an important part of that framework. In operating the framework, we are ensuring compliance with our tax filing obligations and proactively mitigating tax risks. The KSB board is ultimately responsible for the implementation and supervision of the internal control system and procedures relating to risk management.
The day-to-day management of risk and adoption of the group’s internal control principles are delegated to KSB’s Head of Tax, and the executive management of each local entity. In the case where a service is outsourced to a third party, the responsibility to review third party results for consistency and quality rests with KSB’s Head of Tax and the local management.
In order to ensure risks are mitigated and processes are improved, KSB has implemented a tax reporting tool where the tax provision for the monthly, quarterly and annual group financials is calculated. Any identified tax risks will be reported here. KSB’s management has defined monthly reporting with the tax tool has to be done by each local KSB entity. In addition, KSB Group Accounting conducts annual business risk reviews including tax risks.
The available tools combined with the interaction between KSB Headquarter personnel and local management, ensure our control system operates effectively. We operate a decentralised approach with clear lines of escalation, including for KSB UK operations, with the local CFOs in control of timely reporting and escalating tax risks when appropriate.
Whilst we do not have rigid levels of acceptable risk defined as part of our internal control system, we rely on our local teams to consider the likelihood and impact of each area of risk and escalate as appropriate.
As described above, we have a system in place to ensure our local teams are supported in their judgements.
3. The level of risk in relation to UK taxation that the group is prepared to accept
KSB, its management and employees exercise reasonable care and due diligence with the objective of keeping potential UK tax risk to an absolute minimum with respect to compliance and planning issues. We maintain a low tax risk tolerance within KSB Group. Depending on the nature / complexity of a transaction or compliance issue, external advice and support is sought from appropriately qualified external advisers.
4. Our attitude towards tax planning
Observing a conservative approach regarding tax planning, KSB does not engage in any non-compliant tax arrangements or business practices not underpinned by commercial and economic substance. In particular, securing a non-compliant tax advantage is inconsistent with KSB’s understanding of sustainability. All tax measures are in line with the respective tax legislation. Wherever required to mitigate tax risks KSB engages third party tax advisors.
5. The approach of the group towards dealing with HMRC
KSB acts in a transparent, proactive and cooperative manner with HMRC. We seek to comply fully with our UK tax filing, tax reporting and tax payment obligations.