Tax

The Mitsui Chemicals Group (or hereinafter, “our Group” or “we”) is constantly engaged in business activities to realize our Corporate Vision, which comprises our Corporate Mission and Corporate Target. Our Group recognizes that efforts to achieve effective corporate governance as part of the process will allow us to achieve sustainable growth and increased corporate value over the medium to long term.
The tax regulations of countries and regions across the globe affect the business activities carried out by our Group in various ways, and complying with such regulations is one of the important responsibilities companies must fulfill. To adequately fulfill this responsibility, our Group will formulate a tax policy in order to achieve our Corporate Mission and as a result we will avoid not only tax litigation, additional taxes and penalties, but also prevent our Group and its various stakeholders from facing the negative repercussions which arise from such events.

Our Group will not only comply with the tax laws and regulations of each relevant country and region but also respect the spirit of them, and file tax returns and make appropriate tax payments (i.e. using values neither excessive nor insufficient).
Furthermore, to ensure accurate tax processing, our Group will apply proper accounting procedures in accordance with the relevant laws and regulations.

Structure for taxation business

The CFO of Mitsui Chemicals Inc. has responsibility for building our Group’s tax governance structure.

To ensure that the foregoing structure functions properly, our Finance and Accounting Division carries out the following practical tasks and operational management in cooperation with the Finance and Accounting Divisions of each company of our Group.

- Concerning matters that need to be dealt with on a global basis, such as tax audits and transfer pricing regulations, we continuously strive to improve group-level management in cooperation with the Finance and Accounting Divisions of each company of our Group.

- Concerning matters that can be handled to a certain degree within the Finance and Accounting Divisions of each company of our Group, we provide the assistance to each company as necessary to handle tax matters appropriately.

Our Finance and Accounting Division uses the information received from each company of our Group to monitor the tax governance of each group company and each tax item from a group perspective, and implements corrective measures when necessary and reports the status of management to our CFO as needed.

Our Group manages tax planning in a fair and appropriate manner commensurate with our business activities. Furthermore, we comply with international tax rules and the laws and regulations of each country in which we conduct business activities, and make an effort to minimize tax risks.
Our Group does not arrange tax avoidance through the use of tax-free or low-tax countries or regions (so-called tax havens) and does not transfer value created through tax planning in a manner not commensurate with our actual business conditions.

Although our Group strives to deal with taxes in accordance with the tax regulations of each relevant country, there is a certain degree of probability that the tax implications our Group has determined to be appropriate may not be agreed by the tax authorities of the respective country.
Our Group will seek tax advice from third-party tax professionals as necessary researching, evaluating and considering enough multiple options, and make appropriate decisions. We believe that this minimizes the risk of tax litigation, additional taxes and penalties.

International taxation

(1) Transfer pricing

Our Group believes that tax payment will be made appropriately in each respective country and region by allocating income internationally to each group company in accordance with their degree of contribution. Based on this understanding, our Group complies with international regulations such as the OECD Transfer Pricing Guidelines, applies transfer pricing methods based on the results of function and risk analyses and determines prices for transactions conducted with foreign related parties.
In order to reduce tax risk pertaining to transfer prices, our Group receives advice from third-party professionals and utilizes the advance pricing agreement (APA) program and other systems offered by tax authorities.

(2) Elimination of double taxation

If double taxation occurs whereby taxes are levied by multiple countries and regions on the same economic benefits, our Group will strive to eliminate double taxation by taking advantage of the tax treaties and mutual agreement procedures provided by the relevant countries.

Our Group will respond as necessary to inquiries or requests to provide information from tax authorities and maintain good relations with tax authorities.
In order to reduce uncertainty surrounding tax operations and to ensure tax transparency, our Group will apply tax implications in a manner for which rational explanations can be provided and will strive to immediately resolve matters of opinion between our company and tax authorities.
Furthermore, with regard to guidance received from tax authorities, we will take measures to prevent its recurrence.