Tax strategy

The Idemitsu Group recognizes that one of the important social responsibilities of a company is to not only ensure tax transparency but also to comply with the spirit of the law and tax fairness in all countries in which it does business. In addition, we recognize that the rules of international taxation are becoming more complex every year due to the OECD (Organization for Economic Cooperation and Development) BEPS (Base Erosion and Profit Shifting) project, and that tax governance in Japan is becoming increasingly important.
Based on the above recognition, we believe that as our tax activities within the Group tend to become more complex and diverse due to factors such as the globalization of our business, it is becoming increasingly important to address these issues in an organized manner as a Group.

Based on the "Group Accounting Policy" (approved by the President), we have established not only the "Group Basic Tax Policy" within the "Group Tax Regulations," but also other related regulations such as the "Group Tax Practical Guidelines." In addition to complying with these, we will pay taxes in a fair and appropriate manner in compliance with the tax laws and regulations of each country and region.
Furthermore, in the "Group Tax Practice Guidelines," the Group has stipulated a policy of not taking advantage of low-tax jurisdictions for the sole purpose of tax evasion.

In our group, the Representative Director and Executive Vice President, who also serves as the CFO, is responsible for tax governance. The Accounting and Finance Department is responsible for tax matters, and in accordance with the Group Tax Regulations, provides information and advice to each department and group company that carries out our transactions, provides internal education, responds to tax investigations, and considers and implements necessary measures from the perspective of compliance and tax expense management. Our group employees carry out tax matters appropriately in accordance with the regulations, and when requested by the tax department, they report, consult in advance, and submit relevant documents without delay.

If any tax compliance violations occur, we will deal with them strictly and take measures to prevent recurrence in accordance with the regulations established by our group. There were no serious tax compliance violations in fiscal 2023 (0 cases).
In addition, we report any serious compliance issues or important issues or guidance that are discovered during the course of tax audits to management, etc., and thoroughly inform the entire company, and continue to monitor them. We work with internal audits (Audit & Supervisory Board Member or internal audit/internal control departments) to share facts about compliance violations and work to prevent recurrence.

Our group appropriately conducts transactions with foreign related parties in each country and region in accordance with the Group Transfer Pricing Practice Guidelines, which are established in accordance with the OECD (Organization for Economic Co-operation and Development) Transfer Pricing Guidelines.

In our Group Tax Practice Guidelines, our group has established a policy of not using countries with low tax rates solely for the purpose of tax avoidance. If we have a business base in a tax-free or low-tax country, we will pay self-assessment tax in accordance with tax law provisions such as combined taxation.

When conducting tax planning that takes advantage of preferential tax systems in various countries, we recognize the need to consider the tax impact of such systems and take appropriate measures as necessary.

Our group cooperates with tax authorities in good faith and prohibits inappropriate responses such as falsehoods or concealment. In addition, in response to questions and suggestions from tax authorities, we make every effort to provide explanations to gain understanding of our group's views and positions. Furthermore, the Group strives to prevent or minimize the occurrence of tax risks through voluntary disclosure to tax authorities, such as by using pre-inquiry procedures with tax authorities as a means of contributing to appropriate tax payments. I am.

In accordance with the "Group Tax Regulations", the Accounting and Finance Department endeavors to collect information on related tax laws and other matters, and disseminates it to each department and group company that carries out our company's transactions as appropriate. Specifically, we disseminate information on the consumption tax qualified invoice storage method (invoice system) and the introduction of domestic minimum tax (QDMTT) systems in each country. In addition, we provide in-house education on tax matters as necessary.

● Tax payment by country/region (FY2023)