Tax Strategy

1.0 Introduction
2.0 Tax Policy
3.0 Tax Code of Conduct

1.0 Introduction

This document, approved by the Board (hereafter referred to as the “Board of Directors”) of TOMY UK Co., Ltd and TOMY Europe (Holdings) Ltd (together hereafter referred to as “TOMY”), sets out TOMY’s policy and approach to conducting its tax affairs and dealing with tax risk, and is made available to all the TOMY stakeholders. The document will be periodically reviewed and any amendments will be approved by the Board of Directors. It is effective from date of publication, and will remain in effect until any amendments are approved by the Board of Directors. It is published in accordance with Schedule 19 of the Finance Act 2016.

The finance team partners with our business to ensure that:

1. The strategy is adopted and followed consistently, with clear lines of responsibility and accountability;
2. There is alignment of the strategy with TOMY’s overall approach to corporate governance and risk management; and
3. TOMY pays the correct amount of tax required under the laws and regulations of the countries in which it operates.

2.0 UK Tax Policy

TOMY is committed to conduct its tax affairs in a manner consistent with the following objectives, to:

1. Comply with all relevant laws, rules, regulations, and reporting and disclosure requirements, wherever it operates.
2. Ensure the tax strategy is at all times consistent with TOMY’s overall strategy, its approach to risk, and the TOMY Core Values, being Quality, Accountability, Teamwork, Creativity, Agility and Playfulness.
3. Apply professional diligence and care in the management of all risks associated with tax matters, and ensure governance and assurance procedures are appropriate.
4. Foster constructive, professional and transparent relationships with tax authorities, based on the concepts of integrity, collaboration and mutual trust.
5. Use incentives and reliefs to minimise the tax costs of conducting its business activities, but not for purposes which are knowingly contradictory to the intent of the legislation.

3.0 UK Tax Code of Conduct

TOMY’s UK Tax Code of Conduct (“CoC”) outlines the principles setting out how TOMY employees are expected to operate with respect to tax matters in support of the above UK Tax Policy. Non adherence to this CoC could constitute a disciplinary matter, potentially leading to sanctions up to and including dismissal. The Tax CoC is set out in detail below.

1. Compliance with laws, rules and regulations.
TOMY is committed to observing all applicable laws, rules, regulations, and reporting and disclosure requirements, wherever there is a requirement to do so as a result of our business presence and transactions, in line with our Accountability Core Value.

Importantly, the finance team will collaborate with the TOMY’s businesses to provide advice and guidance necessary to ensure compliance, obtaining external advice where necessary. There are clear management responsibilities, backed up by regular monitoring and review, carried out by members of the finance team with the necessary experience and skill set.

2. Consistency with TOMY strategy

Tax decisions will be made at all times in a manner which is consistent with and complementary to TOMY’s overall strategy. Key business decisions should be made cognisant of the tax consequences and with the aim of optimising the after-tax returns for TOMY’s shareholders. The finance team will partner with the businesses to ensure there is that consistency.
3. Governance, Tax Risk Management, and Attitude to Tax Planning and Tax Risk

Responsibility and accountability for TOMY’s tax affairs is clearly defined in accordance with a Tax Responsibility Matrix, and decisions will be taken at an appropriate level, determined by formal Delegation of Authority. The Board of Directors takes overall responsibility for TOMY’s tax affairs. The CFO takes responsibility for the day to day management of the tax affairs, supported by members of the finance team. The CFO will report any significant tax matters to the Board of Directors. Diligent professional care and judgement will be employed to assess tax risks in order to arrive at well-reasoned conclusions on how the risks should be managed. Where there is uncertainty as to the application or interpretation of tax law, appropriate written advice evidencing the facts, risks and conclusions may be taken from third party advisers to support the decision-making process.

In reviewing the risks of a tax action or decision, always bearing in mind the requirements of the UK Tax Policy, the following would be considered:

• the legal and fiduciary duties of directors and employees;
• the requirements of our Core Values and policies, such as the Group Ethics Policy;
• the maintenance of corporate reputation, having particular regard to the principles embodied in TOMY’s Social Responsibility policy regarding the way it interacts with the communities around it;
• the tax benefits and impact on TOMY’s reported result comparative to the potential financial costs involved, including the risk of penalties and interest;
• whether the transactions are structured to give a tax result which is not inconsistent with the economic consequences (unless specific legislation anticipates that result), nor contrary to the intentions of Parliament;
• the interpretation of the relevant laws in a reasonable way, and ensuring transactions are structured consistently with a co-operative relationship;

• the wider consequences of potential disagreement with tax authorities, and any possible impact on relationships with them.

The level of risk which TOMY accepts in relation to UK taxation is consistent with its overall objective of achieving certainty in its tax affairs.

The finance team will employ various risk management processes and systems to provide assurance that the requirements of the Group Tax Policy are being met. This will include compliance and risk monitoring systems and internal audit reviews of tax compliance activity across the Group.
4. Relationships with tax authorities

TOMY is committed to the principles of openness and transparency in its approach to dealing with tax authorities wherever it operates. All dealings with the tax authorities and other relevant bodies will be conducted in a collaborative, courteous and timely manner. The aim would be to strive for early agreement on disputed matters, and to achieve certainty wherever possible.

TOMY commits to:

• adopt open and collaborative professional relationships at all times with HMRC;
• engage in full, open and early dialogue with HMRC to discuss tax planning, strategy, risks and significant transactions;
• make fair, accurate and timely disclosure in correspondence and returns, and respond to queries and information requests in a timely fashion;
• seek to resolve issues with HMRC in real time and before returns are filed if possible, and where disagreements arise, work with HMRC to resolve issues by agreement (where possible);
• be open and transparent about decision-making, governance and tax planning;

5. Incentives and reliefs

TOMY believes that it should pay the amount of tax legally due in any territory. There will, however, be circumstances where this amount may not be clearly defined, or where alternative approaches may result in differing tax outcomes. TOMY will use its best judgement in determining the appropriate course of action, using available reliefs and incentives where possible.

Publication date:- 21st March 2018