Sustainability | GovernanceTax Strategy
Our Approach
Governance
Corporate governance relevant to taxes of the TDK Group is embedded within its overall governance system. This system provides a framework for compliance with applicable tax laws and regulations, minimization of tax risks, maximization of corporate value, and realization of growth for the TDK Group. The corporate governance of taxes is executed under the responsibility of the CFO (Chief Financial Officer), and is delegated in part to persons in charge of taxation at each Group company.
Refer here for more details on risk management activities and major risks.
Strategy
The TDK Group seeks to maximize corporate value while maintaining full compliance with all applicable tax laws and regulations. We continuously monitor changes in the tax environment as well as evolving business models, to identify both tax risks and benefits.
For important transactions such as those with significant tax impacts or those with a high degree of tax uncertainty, the Group managerial decision-making bodies finalize responses based on advice from external experts.
Risk Management
The tax function minimizes tax risks through close cooperation and information sharing with other departments. In cases in which tax uncertainties are identified, these are reported in an appropriate manner, with the responses to be undertaken then finalized in accordance with normal procedures. In addition, to minimize the tax risks involved with regards to significant transactions where applicable tax-related laws and regulations have a broad range of potential interpretations, or where no clear regulations exist, advice from external experts is sought, or pricing arrangements or rulings obtained from tax authorities.
When undertaking risk management in relation to tax, we follow our company-wide risk management process, implementing a PDCA cycle that includes a series of tax-related risk management activities—identification of tax-related risk, assessment, deliberating on and implementing countermeasures, and monitoring—until improvement has been made.
Initiatives
Implementation of Fiscal Year-end e-Learning in Japan
Within Japan, we implemented fiscal year-end tax matters e-learning for all team members from Directors on down. Through this e-learning, we strengthened team members’ awareness of the basic approach to tax compliance, which is to not implement tax treatment in a way that diverges from the facts, whether intentionally or through negligence, and to not engage in any concealing or falsification of the facts.
This e-learning was combined with explanations, using case studies, of tax issues where it is easy to make mistakes in actual operations, and a test was administered to confirm team members’ understanding of the material.
By continuing to implement related education and training on a company-wide basis, we can prevent tax risks from becoming actualized and can maintain and strengthen sound tax governance.
Implementation of Tax Training and Case Study Sessions for Business Division Accounting Managers.
With the tax affairs function of TDK’s global headquarters playing a central role, we have been implementing occasional accounting training in relation to tax for the accounting managers of individual business divisions and overseas subsidiaries in our electronic components segment.
The training was held in a hybrid format combining in-person and online participation, with the aim of enhancing the ability to handle tax-related cases. In the first half of the training, lectures by external experts were used to provide a summary of the latest tax trends and approaches, while in the second half group discussions were held using case studies compiled by the tax function at TDK’s global headquarters. Taking the tax issues relating to value chain restructuring and changes to operational flow as the subject matter, by collating the functions, risks and assets of each business location and engaging in discussion regarding the best processes for examining possible issues, the aim of the training was to strengthen the ability to make judgements in line with the needs of actual practice and to take taxation risk management to a higher level.
Implementation of Education for Personnel Responsible for Tax Matters in the U.S.
Study sessions have been held for personnel responsible for tax matters in the U.S., with the company responsible for overseeing operations in the U.S. playing a central role; the topics included changes to the tax system in the U.S., trends in tax enforcement, etc. During the study sessions, the latest legal and regulatory trends were shared, along with key points to note regarding tax matters. The aim was to enhance participants’ ability to make appropriate judgements when handling day-to-day operations.
Through this ongoing education, besides strengthening the ability to address tax-related risks specific to this particular region, we are also promoting consistent tax operations that conform to TDK’s global tax policy.
Holding of the Global Tax Meeting
Every year, TDK holds a Global Tax Meeting which brings together the managers responsible for tax matters from each region. The aim is to use face-to-face discussion to not only share information about current trends in tax system reform and tax enforcement in each country or region, and about the latest tax-related issues (including the global minimum tax), but also to build consensus regarding tax risk management and develop more in-depth insights.
This year, team members from the corporate planning function and the technology and IP function also attended the Meeting, making it possible to have discussions regarding approaches to tax risk management that took business strategy and value creation into account.
In this way, the holding of the Global Tax Meeting contributes toward strengthening horizontal collaboration across units, and toward enhancing global tax governance as a whole.
Holding of a Study Meeting for TPOs in Europe
A transfer pricing study session was held, with the company responsible for overseeing operations in Europe playing a central role, that brought together transfer pricing officers (TPOs) in the Europe region. During this meeting, besides sharing information about trends in transfer pricing systems in each country and about tax investigation case studies, there was discussion regarding the common transfer pricing policy for the TDK Group as a whole, and practical issues being faced in the implementation of tax matters.
By sharing insights and strengthening horizontal collaboration within the region, the aim was to reduce transfer pricing risk and harmonize the quality of the handling of transfer pricing issues, which in turn will contribute toward strengthening tax governance at the global level.
