Murata Group Global Tax Policy
1.Background and Objective of Formulating this Policy
Murata Manufacturing Co., Ltd. (hereinafter referred to as Murata) is engaged in business activities in the electronics industry under the philosophy, “contribute to the advancement of society by creating innovative products.” In line with this management philosophy, Murata aims to continue to be a company that is trusted by society by committing to compliance with laws and regulations on the basis of high corporate ethics. To these ends, Murata stipulated its CSR Charter and established the Corporate Ethics Policy and Code of Conduct to ensure that all corporate officers and employees comply with the laws and regulations and act in an ethical manner. Murata also clarifies its approach to tax-related matters by formulating this Global Tax Policy.
Murata understands the legislative intents of the tax laws enacted by countries in which Murata and its group companies operate, and commits to comply with such laws. Further, Murata supports OECD’s international tax rules and the Action Plan on Base Erosion and Profit Shifting (BEPS), through which Murata pays taxes in a timely and appropriate manner and fulfills social responsibilities.
Murata appoints the officer in charge of accounting to be ultimately responsible for tax issues, and have structured an organization specializing in tax affairs (“Tax Team”) within the accounting department at the head office. The Tax Team, in collaboration with the departments in charge of tax affairs at group companies, will carry out its tax affairs according to the basic policy.
Murata also formulated the basic policy on establishing a system of internal controls including tax matters, and strives to develop and operate an appropriate internal controls system in line with this basic policy.
4.Tax Risk Management
Murata takes the following actions to minimize tax risks at all times:
- The Tax Team works in close collaboration with the business operation divisions at all times for the early detection of tax risks.
- When a material tax risk is discovered, the Tax Team should investigate the facts and determine how to treat such risk in the context of the legislative intents.
- If any uncertainty as to the tax processing remains, the Tax Team should seek the advice of outside specialists, or make advance inquiries to the tax authorities as necessary in an effort to eliminate such uncertainty.
- In cross-border intra-group transactions, Murata analyzes the functions, risks, and important intangible assets of its overseas group companies, and determines the transaction prices in accordance with OECD’s guidelines on transfer pricing and Murata’s transfer pricing policy.
While paying taxes is important in fulfilling social responsibilities, a corporation must also give consideration on costs. Murata takes the following approach to maximize cash flows:
- If there are multiple options in tax accounting, Murata should select the most favorable method within the scope of its business objectives and legislative intents.
- Murata should aggressively utilize tax incentives under the tax laws of other countries based on applicability.
- Murata should not use schemes with the intent of tax avoidance or use tax havens for the purpose of tax avoidance.
6.Organization and Personnel Training
As tax-related issues are complex and may have material impact on the cash flows, tax affairs require specialized knowledge and wide experience. Murata takes the following actions for the operation of tax-related organizations and training of personnel:
- Since the Tax Team is required to resolve complicated tax issues unique to the head office and to provide guidance to group companies inside and outside Japan, the team should secure experienced personnel with high level of specialized knowledge, keep executing necessary trainings and achieve stable team operation.
- The group companies inside and outside Japan should also secure personnel who can carry out the tax-related tasks efficiently , keep executing necessary trainings and ensure the stable operation.
- Murata should make efforts to spread necessary knowledge on tax among all employees.
7.Establishing Relationship with Tax Authorities
Murata takes the following actions to cooperate sincerely with tax authorities in other countries, and to establish and maintain a sound relationship:
- Murata should implement measures to prevent recurrence of any findings by the tax authorities.
- In the event that a difference of opinion arises with a tax authority, Murata should conduct a constructive dialogue with the tax authority to seek resolution to the issue in accordance with the tax-related laws and regulations and international tax rules.