Tax Stories E5 - Karl Berlin (Orsted) on sustainability & transparency

On football

We started the conversation with.. football. One guess why the football related tax scandals occurred might be a bad choice of external tax consultants. This presents a wider problem – the tax is so complex that for ordinary people (also football players in this sense) is difficult to choose if the structure presented by a consultant is too aggressive. 

Tax story

The Accountant is the movie that comes to Karl’s mind when thinking of a tax story. This made his friends wonder is a tax is really that exciting, and for me this made a new entry to my list of movies to watch. The trailer looks good. 

In the law school tax seemed to be boring

Even Karl admits that his perception at the law school was that tax is a boring topic.. until he saw an add by Maersk. There he quickly realised that tax in practice is different to what you learn at law school. You better understand the business there, meet many people from around the world, solve some super-challenging international issue. Thereafter he never wanted to do something else. 

The tax systems and authorities

When speaking of cultural differences and the best systems from around the world Karl highlights Asian and African countries that apply a lot of withholding taxes that are detrimental to business and economy in general. He also highlighted the UK HMRC as the most professional and skilled tax authority it’s a pleasure to work with. Even in disagreements their position is understandable and the dispute resolution system is well-designed. Their guidelines are written in a way so that non-tax people would understand as well. 

On transformation of the company from black to green

It was fascinating to hear how Orsted transformed from having black business with coal-heated plants and oil & gas business to the green energy leader. Now it is the most sustainable energy company and second most sustainable company in the world, including transparency in tax matters. Karl believes that transparency will be a license to operate in many areas in the future. Karl mentioned also Repsol tax report as an example of being transparent. I wonder why in our country still it’s possible to win public procurements and receive Covid-19 support without paying full taxes properly. 

Then and now, and the future

Comparing to 2007 when Karl started at Maersk importance of a tax department has increased dramatically within any business. It’s a board level issue today. And tax has become an ethical, not only a legal issue. But what is a fair share many are talking about? Besides, we are seeing an end to offshore structures, at least for companies in Europe. And we will see changes in international taxation of businesses on internet. Regarding environmental taxation we see that heavy polluters pay low CO2 taxes, taxation favours oil & gas industry. Polluters have to start paying the price of what it costs to pollute. His fear about the future of taxation is a further complication of transfer pricing and unilateral measures taken by individual countries that could lead to double taxation.