Huawei Technologies (UK) Co., Ltd.’s UK Tax Strategy
Huawei is a leading global provider of information and communications technology (ICT) infrastructure and smart devices and has been operating in the United Kingdom (UK) since 2001. It is proud to support economic growth in the UK through its investment, procurement, employment and partnerships – all helping to bring digital to every person, home and organisation for a fully connected, intelligent world.
Huawei recognises its duties as a responsible corporate citizen, and is committed to complying with all applicable tax laws and regulations in every market where it operates. It does not engage in any aggressive tax planning, meaning that any tax planning must be driven by commercial considerations. This includes how subsidiaries are financed and how the legal structure is arranged. Huawei seeks a fair and stable tax policy framework and actively contributes to forums directed towards the development of good tax practice by engaging with industry bodies and Tax Authorities.
Huawei is organised by Business Group. Where a Business Group has operations in Huawei’s markets, it is required to comply with Huawei’s high tax governance standards.
This Tax Strategy articulates the tax governance standards in relation to the tax affairs of Huawei Technologies (UK) Co., Ltd (HWUK) in the UK. The contents of the strategy are aligned with Huawei’s global tax management policies and supporting operational mechanisms, and is prepared with specific reference to UK tax laws and regulations or accepted practice and the tax principles endorsed by HWUK’s Board of Directors (“BOD”). In particular, the contents are prepared with specific reference to the UK legislation, and are therefore considered to be compliant with the Group’s / HWUK's obligations under paragraph 22(2) of Finance Act 2016, Schedule 19 (Publication of Tax Strategies). It covers all types of taxes relevant to the company including corporation tax, VAT, withholding taxes, employment taxes, customs duties and other taxes.
This Tax Strategy relates to the financial year ending 31 December 2023 and should be read together with other publicly available documents relating to Huawei’s Corporate Governance including Huawei’s Corporate Governance Report, which describes the internal control system. This is based on the five components of the COSO framework: Control Environment, Risk Assessment, Control Activities, Information & Communication, and Monitoring.
The general principles underlying HWUK’s approach to managing its tax affairs:
The general principles are as follows:
Approach to Tax Governance: Tax is recognised as a core part of HWUK’s corporate responsibility. HWUK’s BOD has oversight responsibility for managing tax with operational execution delegated, as appropriate, to senior management in the business segments and supporting functions.
Approach to Tax Compliance: HWUK recognises its duties as a responsible corporate citizen, and seeks to pay all taxes in accordance with the relevant laws and regulations in the UK. The objectives are to submit complete, accurate and timely tax returns and to pay the right tax at the right time and in the right place. This should be based on a sound application of the applicable law and regulations, taking into account the letter of the law and the intent of the legislature, where available.
Approach to Tax Risk: HWUK’s objective is to achieve a high degree of certainty in relation to tax compliance by seeking to manage both operational risks arising from tax compliance processes and activities, and legislative risks arising from uncertainties in the interpretation of tax laws and regulations. Huawei deploys a Tax Control Framework ("TCF") as the primary mechanism to help manage these risks.
Attitude to Tax Planning: HWUK’s business model is driven by commercial considerations. Any tax planning must support business activities, be in the long-term interest of HWUK and have genuine business substance.
Relationships with Tax Authorities: HWUK seeks to develop constructive relationships based on mutual respect and trust with the UK Tax Authorities ("HMRC"). HWUK maintains its relationship with HMRC and handles enquiries and tax audits in a co-operative and professional manner.
Approach to Tax Governance and Compliance – Huawei’s Tax Control Framework
An overview of Huawei’s Internal Control System can be found in the “Internal Controls” section of Huawei’s website (http://www.huawei.com/en/about-huawei/corporate-governance/internal-control). In support of its Internal Control System, Huawei has established a Tax Control Framework (TCF), which has been designed to ensure that its tax affairs are managed in line with this Tax Strategy. A summary of the key supporting elements of the TCF are described below:
| People & Organisation
| Policies & Governance
|Processes & Controls
| Information & IT
The organisation structure established to manage Huawei’s tax affairs and the skills and competencies of Huawei’s people.
This component of Huawei’s TCF supports the delivery of the Tax Strategy by ensuring that the Tax Management Department, country tax function and the wider tax function embedded in the business are organised in an optimal way and have the required skills, capabilities and experience.
The overarching framework adopted by the Board and its supporting layers at Business and Function levels to manage Huawei’s tax affairs.
This component of the TCF supports the delivery of the Tax Strategy by setting out the boundaries within which Huawei must manage its tax affairs.
The Processes established to manage Huawei’s tax affairs including managing transactions and discharging Huawei’s tax compliance and reporting obligations, and the controls designed to mitigate or eliminate the risks arising from Huawei’s activities.
This component of the TCF supports the delivery of the Tax Strategy by ensuring that process and control activities are established, executed and monitored so that processes operate in the way that was intended.
The technologies and systems employed to facilitate effective tax management and to manage data in support of Huawei’s tax compliance and reporting obligations.
This component of the TCF supports the delivery of the Tax Strategy by helping to improve the integrity of data used for tax purposes, and the effectiveness and efficiency of tax processes including assurance over these processes.
| Monitoring, testing & maintenance
The monitoring, testing and maintenance employed to provide demonstrable assurance of the operational effectiveness of the TCF and its continuous improvement.
Approach to Tax Risk
HWUK’s objective is to achieve a high degree of certainty in relation to tax compliance by seeking to manage both operational risks arising from tax compliance processes and activities, and legislative risks arising from uncertainties in the interpretation of tax laws and regulations. Huawei deploys a TCF as the primary mechanism to manage both these risks. The TCF is designed to provide assurance that Huawei’s tax compliance and disclosures can be relied upon and that its tax affairs are properly controlled in accordance with HWUK’s tax strategy. The TCF consists of various elements, including this Tax Strategy, a tax management department comprising of appropriately qualified and experienced tax staff, and suitable operational architecture.
It is recognised however that tax laws and regulations can sometimes be unclear, and where appropriate supplementary professional advice from external tax consultants is sought. Furthermore, to obtain enhanced tax certainty, mechanisms including Tax Rulings and Advance Pricing Agreements may be used, where appropriate.
Attitude towards Tax Planning
HWUK does not engage in any aggressive tax planning, meaning that HWUK’s business model is driven purely by commercial considerations. Transactions must support business activity and have genuine commercial substance.
In particular, HWUK conducts intragroup transactions on an arm’s length basis and complies with its obligations under local transfer pricing rules, including preparation of transfer pricing documentation.
Any significant transactions must be considered and approved by the HWUK BOD.
Relationship with the UK Tax Authorities (HMRC)
To support a constructive relationship based on mutual respect and trust, HWUK seeks to engage with HMRC in a co-operative and professional manner. This is achieved, where appropriate, through engagement with HMRC:
- to consider significant matters such as changes to tax laws and regulations, topical business issues and significant transactions and to agree the interpretation of tax laws, regulations and practices.
- to consider the mechanisms HWUK deploys to provide assurance that its tax control activities are robust and that the tax returns and disclosures can be relied upon to be complete and accurate.
- to address enquiries or tax audits in a co-operative and professional manner.
Approved by HWUK Board of Directors on 27 November 2023