Tax Strategies
Our Policy
As one of our Sustainability Principles—and under the leadership of our top management—we will comply with laws, rules and regulations and engage in ethical business conduct in accordance with all international norms and the social norms that exist at our business locations. With respect to tax affairs, the executives and employees of the INPEX Group acknowledge it is one of our key social responsibilities to contribute to the socioeconomic development of the countries and regions in which we operate by properly paying taxes in accordance with the applicable laws and regulations, and by ensuring the transparency of our tax affairs.
As part of our commitment to maximizing shareholder value, we strive to optimize tax expenses by utilizing available tax incentives and eliminating double taxation in the normal course of business activities. At the same time, we do not engage in tax planning with the intent of avoiding taxes or use countries or regions with no taxes or extremely low tax rates (so-called ‘tax havens’) for tax avoidance purposes without any actual business activities involved.
Tax Governance Structure
As we expand our business globally, our overseas subsidiaries and cross-border transactions with those subsidiaries are similarly increasing. Legislation governing international transactions has been developed in Japan and other countries based on the BEPS 2015 Final Reports issued by the OECD/G20 BEPS Project10 in October 2015, and the environment surrounding international taxation continues to change significantly. In accordance with those changes, we are enhancing tax governance to appropriately respond to taxation risks associated with international transactions. As a part of these initiatives, we have established the INPEX Tax Policy by resolution of the Board of Directors and published it on our website11 to cultivate an awareness of tax compliance among all INPEX Group executives and employees. The Senior Vice President of Finance & Accounting is in charge of such initiatives.
In September 2021, we enacted our Tax Management Rules to promote the tax compliance behaviors of our executives and employees in line with our Tax Policy. We also introduced the Tax Management Policy, which stipulates the establishment and operation of a tax management system in accordance with the Tax Management Regulations.
10 Project to review overall international tax rules to prevent excessive tax avoidance by global companies using gaps and loopholes in the international tax system.
11 Tax policy
Taxation Risks
We identify taxation risks as important business issues. In compliance with our Tax Policy, our departments in charge of tax affairs work to deepen their understanding of the tax laws in each country in which we operate, in addition to transfer pricing rules, other international tax laws, and OECD tax guidelines. Those departments also cooperate and communicate closely with business divisions to mitigate taxation risks. We also make effective use of our external advisors’ expertise in relation to mitigating tax risks.
Relationships with Tax Authorities
We strive to build constructive, trustful relationships with tax authorities and pay taxes appropriately, such as by obtaining certainty through advanced pricing agreements.
Tax Transparency
There is global movement for greater transparency and information disclosure in relation to corporate tax-related activities. As an example, the government of Australia—one of our core business areas—issued a set of principles defining the tax information that large enterprises should voluntarily disclose12. In response to this, we annually publish the INPEX Australia Tax Transparency Report13 on our website to consolidate our Australia-related tax information, including an overview of our local tax governance and cross-border transactions, and how much tax we pay. In addition, we publish annually the amounts of tax and other payments made to the governments of EITI participating countries14. Our consolidated income taxes paid in FY2021 amounted to 352,735 million yen.
As a global company, we will continue to closely monitor international taxation trends and legislative developments in each country and strive to adapt to them in a timely and appropriate manner.
12 Voluntary Tax Transparency Code released by the Australia’s Board of Taxation