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Huawei UK Tax Strategy

Tax Strategy

Huawei is a leading global ICT company that has been operating in the UK since 2001.  The Company is proud to support economic growth through its investment, procurement, employment and partnerships – all helping to build a better connected UK, through the delivery of innovative and transformative ICT solutions.

Huawei recognizes its duties as a responsible corporate citizen, and is committed to complying with all applicable laws and regulations in every market where it operates, this includes taxation.  Huawei’s financial structure, reflects its operating structure. The company has three Business Groups, Consumer, Carrier and Enterprise all of which operate to the same tax compliance environment. This Tax Strategy document is an articulation of that governance in relation to Huawei’ tax affairs. The content of this strategy is in accordance with the Huawei Group’s global practice, but is prepared with specific reference to the UK legislation and tax authorities, and is therefore considered to be compliant with the group’s obligations under paragraph 16 (2) of Finance Act 2016, Schedule 19 (Publication of Tax Strategies).  This document covers all types of taxes including VAT and Corporate Income Tax. 

The general principle of tax planning within Huawei is to pay taxes on time, in accordance with all relevant regulations, taking a collaborative and transparent approach with local authorities.

  • Risk Management and Governance
For an overview of the Huawei Internal Control Framework please refer to the ‘Internal Control’ section of the Huawei Group website (http://www.huawei.com/en/about-huawei/corporate-governance/internal-control). Provided below is some further comment, where merited, on how the COSO framework may particularly relate to the tax affairs of the group.

 Control Environment

Within the Group’s control organization there is a Tax Management Department responsible for the development of tax-related policies, processes and IT systems. The President of the Tax Management Department reports to the Global CFO. The reporting lines for the execution of the group tax management policies and requirements are organized on a geographical basis. Regional CFOs must take responsibility for the localization of tax processes and for internal control management in their respective regions. Country CFOs are then responsible for the compliance and execution of tax solutions in their territories. CFOs are supported by teams of appropriately qualified tax professionals. Compliance with UK tax requirements, are therefore the responsibility of the UK senior management (CEO/CFO). 

The globally harmonized definition of roles and responsibilities enables effective finance management from local execution to global board level, creating an effective internal control environment.

Risk Assessment   Information & Communication Monitoring 
Tax is managed under a similar organizational framework to that described in the ‘Internal Controls’ section of the website.

Huawei implements a process of identifying, assessing, providing for risks and monitoring thereafter. The policy is designed to provide proactive impetus for improvement of business practices, management of tax risk exposure and addressing issues at source as far as possible. 
Global tax processes are developed by Huawei Group in the form of a process framework which is published for the benefit of the entire company. Local territories localize the framework process and publish desktop procedures to ensure compliance with local tax law and continuity of knowledge regarding the processes.

Established processes are subject to testing and results are communicated to management. 
Huawei UK tax control processes are monitored by local management and Regional Headquarters to provide an objective assessment of the local business maturity in relation to all identified tax risks and ensure compliance with established controls and processes.

  • Tax Planning
The general principle of tax planning within Huawei is to pay taxes on time, in accordance with all relevant regulations, taking a collaborative and transparent approach with local authorities.  Huawei engages in tax planning in order to ensure it pays the correct tax across its operations and its tax structure is based upon the overall corporate business architecture.  Effective tax solutions enable the business activities and commercial transactions of the group to be undertaken with all due compliance, whilst minimizing tax risks and managing exposure to unnecessary tax costs.

Governments may implement certain incentives to encourage investment or facilitate trade, for example Research & Development Tax Credits or reliefs under Double Tax Treaties. Where such reliefs are available Huawei will utilize them in accordance with the spirit of the legislation.  Huawei utilizes external tax consultants in order to support the Group’s capabilities for tax compliance and planning. Typically the primary purpose of engaging consultants is to provide assurance that the group is complying with all its local obligations and of the accuracy of its local tax filings. Huawei promotes a fair and stable tax policy framework and is ready to actively contribute to the development of good corporate practice.

  • UK Tax Risk Management
The Huawei Group manages its tax risk exposure in accordance with its objective of paying the correct taxes across its operations. The Tax Management Department establishes the principles by which the group assesses and proactively manages its tax risks. All risks and uncertain tax positions are evaluated based upon the technical merits of the position and the likelihood that additional tax charges may arise. Tax provisions must then be established in the company accounts to the extent that identified risks are considered more likely than not to be realized. 

  • Relationship with HM Revenue and Customs
Huawei is open and proactive in its engagement and interaction with UK tax authorities. Huawei discusses its tax positions but also, as a leading ICT-company, provides insights and expert views on the tax environment and the impact of new trends and draft regulations. Huawei welcomes that current policy trend fostering greater tax transparency, which the company believes provides assurance of fair competition among businesses. Huawei promotes a fair and stable tax policy framework and is ready to actively contribute to the development of good corporate practice.

Huawei UK is committed to maintaining a relationship with HMRC characterized by transparency and collaboration in order to ensure complete tax compliance. This is executed through:
• Regular updates with HMRC on topical business issues or significant transactions
• Real time engagement on business or tax developments
• If an error were discovered in a submitted tax return pro-active and prompt disclosure would be made to properly rectify the position
• Co-operation with queries in an open and professional manner

Document reviewed on 3 December 2018