Mitsubishi Materials Group (“our Group”), based on its corporate philosophy of “For People, Society and the Earth”, develops its global business by pursuing fair business activities. Led by our tax department, information is shared with relevant departments, and with the support of external tax professionals, we seek to prevent actions which are contrary to tax laws and international taxation rules such as the OECD Transfer Pricing Guidelines. In the event where any such actions are found, corrective steps will be taken immediately, and appropriate tax payments will be made.
- Tax Governance
- Our Group shares these tax principles with all directors and employees (including temporary, contracted, part-time and dispatched employees), to ensure transparency in tax matters.
- Internal checks are carried out on a regular basis in order to make appropriate tax filings, and by educating and coaching our employees, we seek to maintain our solid tax governance structure.
- Our Group CFO is ultimately responsible for tax issues within our Group and important issues are reported at the Board of Directors meeting level.
- Tax Related Risks
- Our Group identifies and evaluates tax related risks that may have a significant impact on the Group as a whole. We collect information which is beneficial for this purpose and share this amongst our Group.
- Based on our formulated management policies and plans, we implement our measures and reevaluate our plans.
- As regards domestic taxation, we seek to eliminate human errors such as omissions in data collection by disseminating preventive action plans. We also share information on tax policy and regulations in a timely manner to detect tax related risks at an early stage.
As regards international taxation, we manage tax related risks concerning transfer pricing and anti-tax haven (CFC) regulations as set out in “3. Tax Compliance” below.
- Tax Compliance
Our Group fulfills our social responsibility by making appropriate tax filings and in order to preserve our corporate value, we adhere to tax laws and regulations in and outside of Japan. By doing so, we determine the appropriate tax payments to be made and through objective proofing of the validity of our tax position, seek to ensure that no changes are required to our assumed tax obligations.
- Transfer Pricing
- For related party transactions within our group, we adhere to the OECD Transfer Pricing Guidelines and local transfer pricing regulations and determine prices in accordance with the functions performed and risks borne in each location.
We first analyze the functions performed and risks borne by each company for each related party transaction. We then formulate and adopt transfer pricing policies based on such analyses, and reach a mutual understanding (e.g. by entering into agreements) between the parties before carrying out such transactions.
Measures have been placed to verify whether prices have been determined based on the pre-agreed terms, and prices are modified if necessary. Furthermore, we create and retain transfer pricing documentation which evidences the validity of the prices from a transfer pricing perspective, with the aim to reduce any transfer pricing related tax exposures.
- Anti-Tax Haven (CFC) Regulations
- We make appropriate tax filings and payments in each country and region where our business is conducted, and do not utilize tax haven measures which impact our tax obligations.
We have adopted measures to collect all relevant information from our Group companies outside of Japan, and based on such information, we determine the effective tax rate (ETR) and satisfaction of the economic activity test, and appropriate tax returns are filed.
- Tax Planning
Our Group strives to achieve optimal tax outcomes by utilizing tax incentives only when actual economic conditions are met, whilst adhering to the tax laws and regulations of each relevant country and region.
We collect information which is beneficial for this purpose and share such information amongst our Group. Instructions and support are provided to ensure the adoption of appropriate tax planning measures which are based on actual economic conditions.
(Establishment date: March 29, 2023)