As one of our Sustainability Principles—and under the leadership of our top management—we are committed to ensuring proper payment of tax in the countries in which we operate by complying with both the spirit as well as the letter of the laws of those countries and engaging in ethical business conduct in accordance with all international and social norms.
Our executives and personnel acknowledge that one of our key social responsibilities is to contribute to the socioeconomic development of the countries and regions in which we operate by properly paying taxes in accordance with the applicable laws and regulations, and by ensuring the transparency of our tax affairs.
As part of our commitment to maximizing shareholder value, we strive to optimize tax expenses by utilizing available tax incentives and eliminating double taxation in the normal course of business activities. At the same time, we do not engage in tax planning with the intent of avoiding taxes or use countries or regions with no taxes or extremely low tax rates (so-called “tax havens”) for tax avoidance purposes without commercial substance.
In addition, the transfer prices we apply to international transactions are calculated in accordance with the arm’s length principle as prescribed in the OECD Transfer Pricing Guidelines.
Tax Governance Structure
As we expand our business globally, our overseas subsidiaries and cross-border transactions with those subsidiaries are similarly increasing. Legislation governing international transactions has been developed in Japan and other countries based on the BEPS 2015 Final Reports issued by the OECD/G20 BEPS Project1 in October 2015, and the environment surrounding international taxation continues to undergo significant change. In accordance with those changes, we are enhancing tax governance to appropriately respond to taxation risks associated with international transactions.
As a part of our efforts to publicly state our position and raise awareness of tax compliance among all our executives and employees, we established our Tax Policy2 by resolution of the Board of Directors and publish it on our website. The Senior Vice President of Finance & Accounting Division is responsible for such efforts.
In FY2021, we established our Tax Management Rules to promote tax compliance actions by our executives and personnel in line with our Tax Policy. We also introduced our Tax Management Policy, which stipulates the establishment and operation of a tax management system in accordance with the Tax Management Rules.
Our Tax Management Rules stipulate that we shall not carry out transactions solely for the purpose of tax reduction that at odds with the spirit of tax treaties or laws and regulations.
1 OECD/G20 Base Erosion and Profit Shifting (BEPS) Project: Project to review overall international taxation rules to prevent excessive tax avoidance by global companies using gaps and loopholes in the international taxation system
We identify taxation risks as an important business issue. In compliance with our Tax Policy, our division in charge of tax affairs works to mitigate taxation risks by developing a deeper understanding of the tax laws in each country in which we operate, transfer pricing taxation, other international tax laws, and OECD tax guidelines. The division also cooperates and communicates closely with other divisions to mitigate taxation risks. We also make effective use of external expert advice in mitigating these risks.
Relationships with Tax Authorities
We strive to build constructive and trusting relationships with tax authorities and pay taxes appropriately, such as by obtaining certainty through advanced pricing agreements.
There is global movement for greater transparency and information disclosure in relation to corporate tax-related activities. As an example, the government of Australia—one of our core business areas—issued a set of principles (the Voluntary Tax Transparency Code) stipulating the voluntary disclosure of tax information by large corporations. In accordance with these principles, we annually publish a tax transparency report3 that consolidates our Australia-related tax information, including an overview of our local tax governance and cross-border transactions, and how much tax we pay.
We also annually publish the amounts of tax and other payments made to the governments of countries participating in the Extractive Industries Transparency Initiative (EITI).4
Our consolidated income taxes paid in FY2022 amounted to 906,022 million yen.
As a global company, we will continue to closely monitor international taxation trends and legislative developments in each country and strive to adapt to them in a timely and appropriate manner.