The Sompo Group sets out a basic principle of “Compliance with applicable laws and regulations relevant to its business activities in each country.” The Group aims to maintain and improve its tax compliance in accordance with tax related laws, regulations and standards published by international organizations, such as OECD, EU and UN guidelines, as well as the domestic laws, regulations and standards of each country and region, and fulfills its corporate social responsibility by properly paying its taxes.
2.Approach to International Taxation
The Sompo Group strives to mitigate any risk of damaging corporate value by exposing the Group to tax penalties and/or double taxation, based on understanding the purpose of the BEPS initiative led by the OECD.
International transactions between intra-group entities are conducted at an arm’s length price (*1). The Sompo Group also ensures international income is allocated between parties on an appropriate basis.
3.Optimization of Tax Burden
In order to maximize corporate value, the Sompo Group aims to minimize tax risks and to make appropriate and effective use of tax mitigation measures in accordance with each jurisdiction’s laws and morals. The Sompo Group does not perform tax avoidance by, for example, utilizing excessive tax saving practices (*2) based on interpretations and/or applications that deviate from the actual content, meaning and/or intention of the relevant laws and regulations.
4.Relationship with Tax Authorities
The Sompo Group seeks to maintain a positive relationship with the tax authorities of each country by ensuring that its explanations of its positions are always sincere, transparent and based on true facts.
The tax filing and payment practices of the Sompo Group will be timely and appropriate, and tax-related information will be submitted to the tax authorities when it is requested. On this basis, in cases where it is agreed with the tax authorities that there is a need for corrective and remedial measures, such measures will be appropriately taken by the Sompo Group.
*1 "Arm's length price" means the price of a given transaction were it to be rendered with a third party. In the context of transfer pricing taxation, the price of a transaction rendered with a foreign related party should be determined in the same manner as the arm's length price of that transaction.
*2 "Excessive tax saving practices" are not tax evasion. They consist of the exploitation and abuse of gaps or mismatches in the tax rules of two or more tax jurisdictions in order to reduce the total tax burden of a corporate group. An example of an "excessive tax saving practice" would be the abuse of a company established in a low or zero effective tax rate jurisdiction (a so-called "tax haven") purely for the purposes of tax avoidance.
The Sompo Group never utilizes such "tax havens" purely for the purposes of tax avoidance and, with regard to taxable income derived from group companies established in such "tax haven" jurisdictions where the purpose of such group companies is not connected to tax avoidance, it takes appropriate measures in accordance with anti-tax haven (controlled foreign companies) rules.