Tax transparency
We adhere to Enel’s Group Fiscal Strategy, which is based on a set of principles and guidelines inspired by values such as transparency and legality in tax management, taking responsibility for overseeing its knowledge and application. By approving this strategy, the Board of Directors seeks to ensure consistent management of taxation in all the Company's subsidiaries.
Inter-Company Transactions
All intercompany transactions are subject to a transfer pricing method, which the Enel Group has adopted in line with the arm's length principle, an international standard established by the OECD Model Tax Convention. Accordingly, inter-company negotiations are structured at arm's length prices and conditions, ensuring value creation where the Enel Group conducts its business. To minimize tax risks, and pursuant to applicable regulations, the Group promotes entering into agreements with local tax authorities on transfer pricing methods, profit and loss allocation to permanent establishments and the application of rules on cross-border flows among Group entities. Regarding intercompany financial transactions, Enel Group has adopted a centralized financing model for its subsidiaries, which requires the Group's two financial companies, Enel Finance International (EFI) and Enel Finance America (EFA), to consolidate part of the treasury and financial market access activities, serving as the primary resource for managing the financial or liquidity needs generated by the operating entities. For operations that Enel Americas has or may contract with both financial companies, these inter-company debts shall be booked either at amortized cost, using the effective interest rate method, or at fair value as required by IFRS 13
Compliance
We adhere to the principle of legality, diligently enforcing tax laws to ensure full compliance with applicable tax rules and regulations. Likewise, we do not engage in domestic or crossborder operations or transactions that are purely artificial constructions, that do not reflect economic reality and from which we obtain undue tax advantages when they contradict the purpose or spirit of the tax provisions or system in question.
Tax Jurisdiction
The Company does not conduct investments in or through countries considered to be tax havens. Such investments may only be considered if supported by sound economic and strategic reasons and are intended for the development of the activities included in the Group's corporate purpose.
Tax Incentives
We exclusively use broad-application tax incentives that are accessible to all taxpayers engaged in similar operations or economic activities. These incentives must align with the legislator's intentions, adhere to specific regulations, and ensure they support industrial and operational goals. Additionally, they should be consistent with the economic substance of the investments made.
Fiscal governance
Enel Americas' Tax Affairs Management is responsible for implementing the Group's tax strategy. This includes managing compliance, planning, and monitoring tax matters at the local level. Additionally, as a company, we have adopted a set of rules, procedures, and standards that are part of the Enel Group's comprehensive system of organization and control. These guidelines apply at both the Group level and local level for each subsidiary. The documents are available on the Company's Intranet, which is accessible to all employees. They outline the general rules of conduct related to tax matters that govern the development of our activities. Additionally, there are specific organizational documents at both global and local levels pertaining to tax compliance processes, tax planning, tax monitoring, transfer pricing, and tax risk management.
Tax risks
In order to provide clear and consistent guidelines to address a practical approach to tax risk management within the Company, we have a Tax Control Framework (TCF), which establishes policies and methodological rules to consistently assess, control, and manage tax risk in accordance with the principles and guidelines established in the tax strategy. The TCF seeks to identify the sources of tax risk that could arise, taking compliance with tax regulations as a framework. For this purpose, it maps the respective processes and activities, raising possible risk events and then associating control measures. We can put into place several control measures to minimize uncertainty regarding tax positions and associated tax risks. These include forming an internal analysis committee, consulting with external advisors, and engaging in early discussions with the tax authority to clarify the correct interpretation of tax regulations. This process takes place periodically, and the outcomes are communicated to the relevant corporate functions and governing bodies to identify the most effective strategies for mitigating such risks.
Transparent relationship with tax authorities and all Stakeholders
We ensure transparency and integrity in our relations with the tax authorities, all our stakeholders, and any third party, which allows us to focus on engagement and management of tax concerns from a wide range of stakeholders. We take a collaborative approach with all institutions and associations involved to promote an effective tax system. Since 2018, we have published the Total Tax Contribution Report annually, which is available on our website. To address any potential tax violations, we have established internal channels for complaints. The Group's Code of Ethics provides the framework within which Enel Américas operates. It includes provisions designed to ensure effective implementation and outlines the requirements necessary to support the tax strategy.
Dialogues, responsible tax practices, and future tax legislation
We are dedicated to fostering dialogue and promoting responsible tax practices. Our goal is to significantly contribute to public tax policies that support the development of future tax legislation. We achieve this through active participation in organizations and industry associations and by utilizing the tools provided by current legislation. These efforts enable us to collaborate in creating and refining new tax regulations.
