Statement of Policy on Taxes
Updated March 31, 2022
Whirlpool Corporation’s tax principles are based on the Company’s overall core values and as a consequence we seek to manage our tax obligations in a responsible way. We seek to comply with both the letter and intent of tax laws. We understand that tax is an important component of our overall corporate social responsibility and recognize that taxes we pay are critical to the orderly function of civil society and support the communities in which we operate.
Our tax policy includes the tax principles below and are reviewed and approved by the Vice President, Corporate Controller (“Controller”) and the Global Vice President, Tax (“Tax VP”).
Tax Governance
Whirlpool’s Tax Department is comprised of a team of tax professionals that are led and managed by the Tax VP, who reports to the Chief Financial Officer. The tax department’s key responsibilities include Tax Compliance, Income Tax Audits, Income Tax Accounting and Reporting, and Transfer Pricing.
Tax policies, strategies, and risk are overseen by and reported regularly to Whirlpool’s Audit Committee. The Tax VP and the Controller regularly update the Audit Committee on relevant global tax developments, tax audits, tax controversy and other topics.
Income taxes are a critical accounting matter that are required to be communicated to the Audit Committee. Our external auditor performs specific procedures which include testing the effectiveness of controls relating to income taxes, including controls over uncertain tax positions and the provision for income taxes. These procedures also included, among others, evaluating tax positions taken by management, including evaluating the reasonableness of management’s determination of the probability of sustaining the position under tax examination, evaluating communications with the relevant tax authorities, testing applicable tax rates applied by management, and evaluating the impact of taxes on foreign earnings.
Management of Tax Risks
We file tax returns in any jurisdictions where we are required by the laws of that jurisdiction. We comply with the tax laws (i.e., country, state, localities, etc.) where we engage in business transactions. We design and implement processes and controls to ensure accurate, complete, and timely compliance with financial tax accounting and reporting standards. We have processes in place to proactively identify, evaluate, manage, and monitor potential tax risks associated with our tax positions on a quarterly frequency. Our internal control structure requires us to understand tax risks related to operating in many different jurisdictions across the globe. Prior to taking tax positions, we consider the tax consequences and assess the likelihood of sustaining the tax position should there be a jurisdictional audit. We continuously monitor tax law changes in countries in which we operate to understand the impact on our organization. We maintain a global team of experienced tax professionals in each region, provide relevant training, and seek counsel from external tax advisors across the world when necessary. Our process to manage potential tax risks is supported by internal controls that allow for objective reporting and disclosure of risks related to our tax positions.
Identifying and Qualifying for Tax Incentives
Where the Company claims tax incentives offered by government authorities, we seek to ensure they are transparent and consistent with statutory or regulatory requirements. We use tax incentives when they are aligned with our business, strategic and operational objectives, and enhance our ability to create sustainable operations and employment opportunities.
Legal Entity Structures
We will only develop legal entity structures that are motivated by business considerations and have economic substance. We do not take or recognize any tax benefit for tax positions that are less than a “more likely than not” level of certainty of being sustained upon a jurisdictional audit, and we do not engage in tax shelters.
Engage in Supporting Responsible Tax Systems
We engage in dialogue with federal, state and local governments, and business groups to support the development of effective and fair tax systems. We provide constructive input to governmental bodies to ensure a practical understanding of existing and proposed legislation to ensure that enacted legislation achieves the stated intent.
Relationship with Tax Authorities
Tax matters are complicated, especially for a large multinational company the size of Whirlpool. Operating across multiple jurisdictions with complex tax laws, sometimes tax authorities enquire about tax positions on Whirlpool’s tax filings, and sometimes Whirlpool disagrees with a tax authority’s interpretation of these complex tax laws. When those disagreements arise, Whirlpool engages with tax authorities with integrity, respect, and fairness, seeking to resolve the dispute as efficiently as possible while fulfilling its fiduciary responsibility to its shareholders.
If we ultimately fail to come to terms with the tax authority, we will not refrain from bringing cases in the courts to achieve an assertive answer on the correct interpretation of the various tax laws.
In situations when there are no tax positions in dispute, Whirlpool regularly communicates with tax authorities and may proactively seek advance tax rulings and pursue mutual agreement procedures.