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Global Tax Policy

General Principle

Ãå±±½ûµØ. (the “Company”) and its affiliates (collectively referred to as the “Group”) understands that a tax system is one of the significant infrastructures for supporting financials of each country and construct a society. The Group, as a taxpayer, contributes to financials of each country by booking sales and profit and paying taxes in accordance with business substance in each country and carries out its business with securing tax compliance under a robust tax governance system. Further, the Group identifies, analyzes tax risks in a timely fashion and addresses to mitigate the tax risks. The Group makes efforts to have a productive relationship with each tax authority by properly declaring tax return, paying taxes and providing information to them in a timely fashion. Further, the Group works to enhance tax transparency by disclosing tax related information to not only tax authorities but also various stakeholders including shareholders and investors.

Tax Governance

The Board of Directors of the Company entrusts a large portion of the decision-making over the business execution to the Representative Corporate Officer and CEO to the extent permitted by laws, regulations and the Articles of Incorporation. The Representative Corporate Officer and CEO entrusts the authority to each corporate officer under their segregation of duties resolved by the Board of Directors. Each corporate officer determines necessary policies, regulations and procedures to carry out the business execution and conducts decision-making over the business execution within the scope of business entrusted under the resolution of the Board of Directors. Further, each corporate officer secures autonomy in the business execution by designing internal control system within its scope of business and enhances maneuverability and feasibility in the business execution. The Chief Financial Officer (CFO) develops this global tax policy as one of the corporate officers to properly execute the business entrusted under the resolution of the Board of Directors under above mentioned corporate governance system, and reports to the Board of Directors if necessary. A tax team of the Company identifies, analyzes group-wide tax risks and plans countermeasures under this global tax policy. Further, CFOs and tax teams in each region manage region/country-level tax risks. Furthermore, the tax team of the Company prepares a system to secure sufficient cooperation among the Company and each region, and all of them liaise closely with each other and struggle to mitigate tax risks globally.

Tax Compliance

The Group defines compliance as the “observance of legal and ethical standards” and positions it at the core of management activities. In tax field, the Group gives top priority on compliance to tax laws and regulations applied in each country where the Group carries out its business. The Group drives forward proper tax payments by ensuring adherence of compliance to all officers and employees.

Tax Risk Management

Following a business being complicated and expanded globally, tax risks that is an occasion to arise different interpretations between each tax authority and a taxpayer about tax laws and regulations applied to each transactions are increasing. The Group addresses to identify tax risks properly under above mentioned tax governance. If the Group specifies a significant tax risk, the Group carries out efforts to mitigate or obviate the tax risk to be apparent by reporting/consulting to each tax authority before and/or after the event with getting advices from external tax advisors.

Transfer Pricing

The Group fulfills proper tax payments to each country where the Group carries out its business by properly allocating its profit earned through the business to each affiliate in accordance with the degree of contribution. To achieve the result, the Group determines a transfer price that is a price of intra-group, cross-boarder transactions based on arm’s length principle reflecting functions and risks of each affiliate under OECD transfer pricing guideline. The Group does not determine a transfer price with the purpose of transferring generated value such as intangibles and shifting profit to low-taxed countries without business substance. Further, the Group prepares a transfer pricing documentation under tax laws and regulations in each country and provides it to a tax authority if necessary.

Proper Tax Payments, Tax Incentives and Tax Haven

The Group strives to maximize shareholders’ value by ensuring proper tax payments reasonably utilizing tax incentives such as R&D credits granted in each country by aggressively spending resources in projects of global new drug development and eliminating double taxation by utilizing a tax treaty. The Group does not carry out a tax planning and organize an artificial tax structure without business substance in order to take tax incentives or generate double non-taxation. Similarly, the Group does not utilize counties or jurisdictions where are non-cooperative for disclosure of tax information or impose non- or low-taxes (so-called tax havens) with the purpose of tax avoidance.

Relationship with Tax Authority

The Group makes efforts to have a productive relationship with each tax authority. The Group properly declares tax returns and pays taxes under tax laws and regulations in each country in a timely fashion, sincerely responds to a request from tax authorities for providing information and takes measures to prevent recurrence to matters that tax authorities pointed out. Further, the Group addresses to obviate arising a tax risk and eventually a tax dispute by applying a bilateral advance pricing arrangement between tax authorities with regard to a significant intra-group transaction. Furthermore, the Group makes efforts to have a productive information exchange with each tax authority by making a request of tax reform through an industry group.

Tax Transparency

The Group supports OECD to address to Base Erosion and Profit Shifting (BEPS) projects. The Group works to enhance tax transparency by not only properly providing information to declare tax returns and pay taxes under tax laws and regulations in each country and OECD guidelines, but also disclosing statutory financial statements and its notes under IFRS and voluntarily disclosing some information in its corporate website. Please refer to below links to see more information about notes to Consolidated Financial Statements (Income taxes), List of Group Companies, and Country-by-Country Report (Condensed).