Tax strategy

Financial Year ended 31 December 2017

Scope
This has been prepared in accordance with Schedule 19 of the UK Finance Act 2016, and was approved by the Board of Inter Pipeline Europe Limited on 21 November 2017.

Inter Terminals’ tax strategy applies to Inter Pipeline Europe Limited, a UK registered company, and all its subsidiaries in the United Kingdom, Ireland, Germany, Denmark and Sweden.

Inter Terminals comprises the bulk liquid storage business segment of the Inter Pipeline Group, which is headed by Inter Pipeline Ltd., a Canadian registered company.

Governance and tax risk management
Inter Terminals’ tax affairs are managed and reviewed by appropriately qualified in-house tax and Customs assurance professionals based in the UK. Support on routine compliance matters is also provided by finance professionals, and where applicable, external advisors, in Ireland, Germany, Denmark and Sweden, where the activities in those locations are insufficient to warrant a full time in-house tax resource.

In-house tax and Customs assurance management are responsible for communicating and maintaining appropriate operating and accounting procedures, which help to ensure that the applicable controls are in place to facilitate timely and accurate compliance with tax legislation.

Inter Terminals’ Tax and Treasury Manager reports on material tax risks and on the tax impact of significant transactions to the Board of Directors of Inter Pipeline Europe Limited, who are responsible for approving such transactions and any legal processes to be undertaken.

Oversight is also provided by Inter Pipeline Limited’s Canadian based team of tax professionals, who regularly report on the Group’s tax affairs to the Inter Pipeline Board and Audit Committee.

Tax risks are identified, assessed by reference to likelihood of occurrence and potential impact, and reported by Inter Terminals to Inter Pipeline, in accordance with a global risk management framework established by the Inter Pipeline Group’s risk management team.

Risk Management Frameworks are utilised to inform internal testing programmes, both routine checks and annual plans across Inter Terminals. Results are openly reported with anomalies rectified and appropriate measures adapted ensuring risk is continually reassessed.

Attitude to tax planning and Tax Risk
Inter Terminals has a low tax risk appetite, and in most circumstances is not willing to accept risks that may result in reputation damage, financial loss or exposure, or significant incidents of regulatory non-compliance.

All subsidiaries of Inter Pipeline Europe Limited are tax resident in countries where their business operations are located, and accordingly tax is paid in the jurisdictions in which Inter Terminals’ employees and assets are located.

Intra-group transactions are undertaken on an arm’s length basis and in compliance with transfer pricing legislation, ensuring that appropriate profits are earned in the UK and any other applicable jurisdictions where personnel are employed in provision of intra-group management and advisory services.

Transactions, financing and structuring within Inter Terminals are undertaken tax efficiently, but always with a commercial purpose, supporting underlying investment and business activities.

Inter Terminals uses legitimate tax incentives put in place by governments to promote investment in the applicable tax jurisdiction. For example, Inter Terminals operates a continuous programme of maintaining and investing in growth and improvement of its infrastructure, which is dedicated to the provision of specialist storage and handling facilities for its oil, gas, chemical and biofuel storage business. Inter Terminals benefits from tax relief on the majority of such capital expenditure.

External advisors are engaged to provide advice where there is a need for specialist support to ensure transactions and processes are structured to minimise tax risk and to be compliant with the relevant local tax legislation, for example in the case of unusual transactions such as acquisitions and corporate restructuring, or where complex new legislation is being introduced, or where there is any uncertainty in the interpretation of tax law.

Relationship with tax authorities
Inter Terminals seeks to comply with the tax laws in each jurisdiction in which it operates, collecting and paying over its taxes and filing tax returns on time.

In keeping with the core values of Inter Pipeline of which Inter Terminals is a subsidiary, Inter Terminals seeks to conduct business with all internal and external stakeholders, including tax authorities, in an ethical, open and honest manner at all times.

A transparent approach is taken to disclosing all relevant facts and circumstances to the tax authorities, and Inter Terminals seeks to maintain an open and constructive relationship with them. A policy of proactive consultation is adopted, including sharing relevant information regarding business activities.