We have established the Nippon Shokubai Group Code of Conduct as a guideline for all officers and employees of Nippon Shokubai Co., Ltd. and its Group companies to follow when taking specific actions. It enables us to ensure the trust of all stakeholders and promote sustainable business activities aimed at putting our corporate philosophy into practice. Following this Code of Conduct means making tax compliance a top priority. That’s why we have established the following Tax Policy for the Nippon Shokubai Group that ensures compliance with the corporate tax laws and regulations of each country and region where we operate as well as all tax treaties, and international tax rules as we work to ensure that we pay our fair share of taxes as required.
This Tax Policy has been approved by the TechnoAmenity Promotion Committee (which is chaired by the President and composed of inside Members of the Board and Executive Officers appointed by the President).
1. Tax compliance system
Nippon Shokubai’s Accounting Department works with the accounting departments of Group companies to enhance overall tax compliance across the Group. In order to achieve this, we have our Accounting Department’s tax personnel take part in external training to acquire the necessary expertise, staff the department with a specified number of employees with long-term practical experience, and take other measures as we endeavor to maintain and strengthen our tax governance system.
We also make sure that important matters, such as those related to tax audits and transfer pricing, are reported on at regularly scheduled Corporate Managing Committee meetings.
2. Tax planning
The Nippon Shokubai Group seeks to improve the cash flow from its operating activities through proper tax planning, but does not undertake tax planning that is out of step with its actual business substances, use tax havens for tax avoidance purposes, or transfer profits to low-tax jurisdictions without an economic rationale.
3. Response to transfer pricing taxation
We set intergroup transaction prices in accordance with the OECD Guidelines and other relevant international regulations. We also assess foreign subsidiaries based on functional and risk analysis to determine whether the distribution of profits is appropriate. At the same time, we maintain transfer pricing documents in accordance with the tax laws and related regulations of each country in order to identify transfer pricing risks on our own. However, since it is difficult to completely eliminate the risk that a transaction price determined to be appropriate by our Group will not be recognized by the tax authorities of each country, we seek advice from outside experts, use the Advance Pricing Arrangement, etc. to minimize such a risk. In the event of double taxation, we will endeavor to resolve it through tax treaties or mutual consultation.
4. Relationship with tax authorities
We will respond to requests from tax authorities to provide information, submit materials, etc., and provide the basis for decisions on tax treatment carried out by our Group in tax audits, etc., as we strive to maintain and build a good relationship with tax authorities. We will also endeavor to promptly take measures to prevent any recurrence with respect to deficiencies identified by the tax authorities in past tax audits, etc. However, if the decision of the tax authorities is unreasonable in light of laws and regulations, we will file for relief via an appeal hearing, mutual consultation, etc. if it is appropriate to do so.