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Inabata Group Global Tax Policy

Inabata & Co., Ltd.
March 26, 2018

The officers and employees of Inabata & Co., Ltd. and its subsidiaries (Inabata Group or “we”) strive to comply with applicable laws and regulations of each country and region where Inabata Group conducts business, as well as with internal rules of Inabata Group. It is our social responsibility to pay the correct amount of tax in accordance with applicable laws and regulations of each country and region, and to ensure transparency. We believe that proper tax payment contributes to economic development of each country and region, which eventually leads to achieving Inabata Group’s sustainable growth, and hence, increasing its corporate value in the long run.
Inabata Group is committed to minimizing tax risks as well as maintaining and improving tax compliance through the following measures:

We will pay taxes properly complying with laws and regulations of each country and region, tax treaties, and international taxation rules set by the Organization for Economic Co-operation and Development (OECD). We will ensure transparency regarding taxation to tax authority of each country and region, as well as our stakeholders.

2.Tax strategy
We understand that avoidance of double taxation and appropriate use of tax incentives leads to increasing the corporate value. We will not engage in any transaction, which lacks substantial economic activity, for the purpose of tax avoidance.

3.Transfer pricing
Transfer pricing for transactions within Inabata Group shall be based on OECD’s “arm’s length principle,” and in accordance with OECD Transfer Pricing Guidelines as well as laws and regulations of each country and region. Profits will be appropriately allocated based on the level of contribution among group companies in each country and region, such as risks undertaken for transactions and functions performed.

4.Relationship with tax authorities
We will build and maintain good relationship with tax authorities in countries and regions in which we operate, by consulting in advance such as to smoothly resolve tax issues, if any, and through disclosure of information conducted in an appropriate and cooperative way.

UK Tax Strategy

In compliance with requirements of U.K. Finance Act 2016, Schedule 19, para 16, Inabata & Co., Ltd. (IKJ) prepares and announces the following U.K. tax strategy concerning Inabata UK Ltd. (IKUK).

IKUK is a limited company, domiciled in the U.K. and a wholly-owned subsidiary of IKJ, a listed company in Japan. IKJ is the ultimate parent of IKUK. IKUK is the sole U.K. entity in the Inabata Group headed by IKJ.

This tax strategy, which is effective for IKUK’s fiscal year ending March 31, 2018, was approved by the board of directors of IKJ on February 26, 2018.

The board of directors of IKJ is responsible for the corporate governance, compliance as well as overseas accounting and tax operations of Inabata Group.

Director & senior managing executive officer in charge of financial management of IKJ is responsible for Inabata Group’s tax management. General manager of Financial Management Office of IKJ is responsible for the day-to-day management of U.K. tax.

Tax Risk Management
IKJ takes a conservative approach to manage taxes and seeks to reduce tax risks within the range of complying with the relevant tax laws and regulations.

IKUK’s objective of its tax risk management is to comply with U.K. tax laws and regulations and pay the correct amount of tax by the due date.
IKUK confirms the applicable tax treatment and reduces its tax risks by consulting with external independent professional firms. Advice is sought from them on the tax impact of significant transactions or any changes in business and company structure, as well as recent legislative changes. Furthermore, IKUK requests external advisors to prepare and review all tax returns.

Tax Planning
IKJ is involved in IKUK’s tax planning, which is aligned with IKUK’s business activities and in compliance with U.K. tax rules and regulations.

Inabata Group takes a conservative approach to tax risk and does not engage in purely artificial tax arrangements that lack economic substance. However, it evaluates business options in order to raise tax efficiency.

Relationship with HMRC
IKJ is committed to the principles of openness and transparency with relevant tax authorities.

IKUK engages with HM Revenue and Customs (HMRC), with honesty, integrity and mutual respect and works collaboratively to resolve disputes and obtain certainty. Day-to-day interactions with HMRC are managed by accounting & administration manager of IKUK under directions and guidance of Financial Management Office of IKJ.