Aisin Group tax governance policy

Aisin Group based on the understanding that enhancing its corporate governance program maximizes corporate value, prioritizes developing amicable relations with all stakeholders, and fair and transparent management.

As a global company with operations reaching into every corner of the globe Aisin Group believes that complying with all applicable tax laws and regulations and paying the proper amount of tax within each jurisdiction plays a significant role for the sustainable development of society. Thus, commitment to tax transparency is an integral part of our social responsibility activities.

Aisin Group takes into account the trend in international tax framework and tax reforms in each country and region and implements necessary measures to maintain and improve corporate tax governance, reducing tax risk and optimizing tax cost and related expenditures.

Tax compliance

Aisin Group is committed to comply with all applicable tax laws and regulations in each county and region and strive to pay the proper amount of tax in each jurisdiction as a responsible corporate citizen of international society.
This includes utilizing tax relief, allowances, and incentives in accordance within the legitimate scope of commercial operations.

International tax framework

Aisin Group recognizes that international efforts such as the BEPS (Base Erosion and Profit Shifting) projects by the OECD (the Organization for Economic Cooperation and Development) are important approaches for preventing international tax avoidance and maintaining tax transparency, and makes every effort to confirm to this international tax framework.

Tax planning

Aisin Group understands that engaging in aggressive tax planning without commercial and economic substance, utilizing tax haven inhibits appropriate tax payment in each country and region and tax transparency.

Aisin Group places utmost value on appropriate and reasonable business management, and only expands our global business or implements global business structures based on clear commercial outcomes and attributes. We will not use tax havens for tax avoidance and evasion or engage in abusive tax planning.

Transfer pricing

Aisin Group observe OECD transfer pricing guidelines and sets transaction prices between group companies based on the arm’s length principle, and makes every effort to pay appropriate amounts of tax in jurisdictions where we operate based on the value which is created during the conduct of our business activity.
In addition, based on the analysis of each group company’s function, assets, and commercial risk, regularly evaluates the appropriate distribution of income within the supply chain, and prepares transfer pricing documents to comply with all applicable tax law and regulation requirements in each country.

Relationship with the tax authorities

Aisin Group seeks to have a professional and constructive relationship with the tax authority of each country and region by complying with all applicable tax laws and regulations providing information as requested by tax authorities in a cooperative and appropriate manner.

Whenever tax adjustments, difference of opinion with the tax authorities, or international double taxation occurs, Aisin Group will professionally and properly respond by seeking a rational and transparent resolution that abides by the tax laws and regulations. Also if the tax position of the Aisin Group differs with the tax authorities and determines that the company’s position needs to be revised we will take preventive measures to prevent similar recurrences.

Mitigation of tax risk

Aisin Group may be required to make decisions on business transactions that could have a level of uncertainty or risk. We will seek advice as appropriate from third party consultants on transactions where uncertainty exists and also engage in full, open and timely dialogue with the tax authorities whenever necessary for a swift resolution.
We are committed to reducing tax risk by taking into account cross border transaction volume and associated tax implications, and for important transactions utilize APA (Advanced Pricing Agreement).

Tax governance system

In order for Aisin Group to respond to business environment changes and changes to each country or region’s tax legislation, the vice president of Aisin Seiki in charge of finance department will be responsible for ensuring that the finance department manager and the tax group manages tax affairs and risks throughout the group appropriately and effectively.
Also a structure for close coordination and information sharing within the group company and individual departments, and a system to receive technical tax advice and support from third party consultants are maintained to ensure the accuracy in tax interpretations and to strengthen tax governance system.

Employee education and tax awareness activities

Aisin Group in line with Aisin group’s Guidelines for Corporate Behavior is committed to continuously educate senior management and employees by conducting tax compliance seminars and e-Learning training programs so they are able to implement appropriate measures to ensure compliance with relevant tax laws and develop tax awareness.

Reference: Aisin Group income tax expenses by region

(Unit: hundred million Japanese yen)

Japan 460
Others 157
Total 617

In the securities report, Aisin Group discloses the amount of income tax expenses and the difference between statutory tax rate and effective tax rate