Group Shared Policy on Global Tax
Established on April 1, 2016
Revised on April 1, 2017
Revised on April 1, 2018
Revised on April 1, 2020
Revised on April 1, 2023
- Basic Principles
- 1. Compliance with Tax-related Laws and Regulations
- 2. Minimization of Tax Risks
- 3. Maximization of Corporate Value
- 4. Part of Business Activities
- 5. Transfer Pricing
- 6. Ensuring Transparency to Stakeholders
- 7. Relationships with Tax Authorities
- 8. Tax Governance
The Ajinomoto Group understands that it is the social responsibility required of companies to contribute to the development of local communities by returning a portion of the profits earned by complying with tax-related laws and regulations and appropriately paying taxes to the countries and regions in which it does business.
The Ajinomoto Group understands that appropriately managing tax risks is an important factor in business decisions and is a condition for the business continuity or sound business promotion of the Ajinomoto Group, and ultimately for the enhancement of its corporate value.
Based on the above philosophy, the Ajinomoto Group establishes and thoroughly implements the Group Shared Policy on Global Taxes (the "Policy") to ensure compliance with tax-related laws and regulations, management of tax risks and appropriate tax payment, and the development and operation of a transparent tax governance system to support these initiatives.
1. Compliance with Tax-related Laws and Regulations
The Ajinomoto Group complies with applicable tax-related laws and regulations in the countries and regions where it operates and conducts its business in compliance with the standards published by international organizations (Guidelines of OECD, EU and UN).
The Ajinomoto Group develops an effective tax governance system and engages personnel in charge with appropriate skills and experience in key tax decisions.
2. Management of Tax Risks
The Ajinomoto Group aims to reduce tax risks to the tolerable low level by appropriately evaluating and managing tax risks in response to complexities or uncertainties in the business environment. In considering significant transactions, the department in charge of tax affairs will be involved in the project in the early stage and reasonably manage the risks by considering the appointment of external tax advisors or the use of referral processes to tax authorities.
3. Maximization of Corporate Value
The Ajinomoto Group aims to improve EPS or other KPI, maximize free cash flow and, in turn, maximize corporate value by minimizing tax and tax-related expenses through the application of tax benefits, etc., to a reasonable extent to its business purposes.
The Ajinomoto Group applies tax conventions between countries in which it operates to avoid the double taxation imposed in multiple countries on the same economic profits. In principle, the Ajinomoto Group does not have a permanent establishment (PE) abroad.
4. Part of Business Activities
All transactions by the Ajinomoto Group are for business purposes and are not for tax purposes only. In addition, the Ajinomoto Group does not apply tax benefits that do not involve business purposes or actual business conditions.
The Ajinomoto Group does not use organizational structure or does not move its profit to low-tax jurisdictions (so-called tax havens) that do not involve business purposes or actual business conditions to avoid tax.
5. Transfer Pricing
Regarding cross-border intra-group transactions, the Ajinomoto Group aims to allocate the profit properly among countries and the Ajinomoto Group companies based on their value contribution defined by the analysis of the function, assets and risk assumed by each one, considering Armʼs Length Principle.
The Ajinomoto Group complies with regulations on transfer pricing documentation and manages the tax risks in transfer pricing in line with the transfer pricing policy which is separately established under the Policy. If necessary, the Ajinomoto Group considers using official processes for the avoidance of double taxation, such as the APA (the Advance Pricing Agreement) or the MAP (the Mutual Agreement Procedure), to minimize the tax risks in transfer pricing.
6. Ensuring Transparency to Stakeholders
The Ajinomoto Group discloses its approach to and information on taxes to each stakeholder. The Ajinomoto Group also discloses tax-related policies in a timely and clear manner.
7. Relationships with Tax Authorities
The Ajinomoto Group follows the tax administration procedures, collection procedures, etc., in each country. The Ajinomoto Group also works appropriately and collaboratively with tax authorities to ensure transparency and responds promptly to requests and tax audits.
In cases of uncertain tax treatment, the Ajinomoto Group may discuss the matter in advance with tax administrations or seek the advance clearance on the appropriate treatment.
The Ajinomoto Group maintains sound and normal relationships with tax authorities and does not provide unjust benefits.
In addition, in case that the tax decisions of the Ajinomoto Group conflict with the views of the tax authorities, the Ajinomoto Group considers seeking correction through legal processes if its tax decisions are considered reasonable in light of the relevant laws and regulations and the purpose of them.
8. Tax Governance
The Executive Officer in Charge of Finance in Ajinomoto Co., Inc. is responsible for the development and maintenance of the governance system of tax compliance and tax risk management and reports the governance status based on the Policy to the Board of Directors.
Under the instructions of the Executive Officer in Charge of Finance, the department in charge of tax affairs in Ajinomoto Co., Inc. (the “Global Tax Group”) works to ensure cooperation among the Ajinomoto Group companies and to ensure a tax governance system that continuously complies with the Policy.
The Global Tax Group establishes the Ajinomoto Global Tax Procedures to clarify and materialize activities in accordance with the Policy and thoroughly ensures compliance with the Policy.
The department in charge of tax affairs in the Ajinomoto Group companies is responsible for each of their compliance with the Policy and tax-related laws and regulations.
Personnel belonging to the department in charge of tax affairs continuously develops and improves a broad range of skills to address tax issues by participating in external capacity-building programs or training on the environment and tax strategies surrounding tax matters.
The Ajinomoto Group ensures a system in which the Ajinomoto Group can always fulfill its social responsibilities related to tax affairs by regularly reviewing the Policy
The Policy is disclosed as one of the "Ajinomoto Group Policies". At the same time, the Policy announces the annual tax strategy and policy for tax measures in the UK in accordance with the provisions of the UK Financial Act 2016(Schedule 19, paragraphs 19(2) and 22(2)).