CMP Group Tax Policy

CHUGOKU MARINE PAINTS, LTD. and its subsidiaries (collectively, “CMP Group”) make appropriate tax payments in compliance with tax laws and regulations in the relevant countries and regions where CMP Group does business to fulfil their social responsibilities.

In CMP Group, the director in charge of Finance and Accounting has the responsibility for CMP Group’s tax governance, and the department in charge of tax which reports and manages tax matters is supervised by the director.

To fulfill the tax obligation appropriately, CMP Group, establishing and maintaining the internal control system and the risk management system, carries out tax-related tasks properly such as tax documentation and document management and makes its best efforts to reduce tax risks arising from errors in practical operations.

To maximize CMP Group’s shareholder value, CMP Group strives to utilize effectively the tax relief measures available in general business activities in the relevant country or region and optimize tax costs. Furthermore, CMP Group shall not implement any measures based on interpretation departing from the tax regulations, which may be considered or interpreted as tax evasion.

To deal with the increasing tax risks caused by the extended reporting obligation for the global business, highly developed tax investigation and its forceful enforcement in the relevant country or region, CMP Group consults with tax advisors and seeks advice as necessary.

Prices that are applied to CMP Group’s transactions are set in consideration for the relative risk and added value in accordance with the Transfer Pricing Guidelines published by the OECD and also in accordance with the arms’ length principle. In cases where the documentation of the pricing method is obligatory in the relevant country or region, or where such documentation is necessary due to factors such as transaction size and potential taxation risks, CMP Group generates the documents in an appropriate manner.

When establishing a subsidiary, CMP Group determines the country to establish in order to conduct general business activities, not to avoid taxes. When investing in a low-tax country, CMP Group makes appropriate tax payments in accordance with the laws and regulations of the relevant country or region.

CMP Group endeavors to maintain proper and cooperative relationships with the tax authorities in the relevant country or region where CMP Group does business through communication. CMP Group explains to and corresponds with them in a sincere and appropriate manner.

CMP Group consults with the tax authorities about the important tax matters and unusual transactions depending on the situation. If tax authorities notify CMP Group of tax adjustments, CMP Group determines the cause of such issues, and takes appropriate corrective measures or improving measures unless CMP Group files a petition of objection or tax lawsuit.