The NEC Corporation is the ultimate parent company of the global NEC group, established in Tokyo, Japan. The principal activity of the NEC group and its subsidiaries is the purchase and supply of systems, components, services and integrated solutions for computing and communications applications, as well as high performance computing solutions.

GROUP TAX STRATEGY

This strategy applies to the group of companies in the UK ultimately headed by the NEC Corporation in accordance with paragraph 19 of Schedule 19 to the Finance Act 2016. A list of the entities to which it applies is set out below. In this strategy, references to ‘NEC Corporation’, or ‘the group’ are to all these entities. The strategy has been published in accordance with paragraph 16(4) of the Schedule.

The NEC Corporation Tax Strategy determines its approach to tax compliance, risk management and its relationship with tax authorities.

The group will ensure its Tax Strategy is fully aligned with the Global NEC Vision, in which the aim is “create the social value of safety, security, fairness and efficiency to promote a more sustainable world where everyone has the chance to reach their full potential”. Within this vision the group Tax Strategy sets out to govern, manage and disclose tax risks and report tax positions, submit tax returns and pay the correct tax due in a timely and accurate fashion. Furthermore, the group will adhere to the at arms’ length principal regarding intragroup transactions between NEC companies, as set out in current OECD principles and in accordance with current and future Base Erosion & Profit Sharing (BEPS) related developments and implementations.

This strategy applies from the date of publication until it is superseded. References to ‘UK Taxation’ are to the taxes and duties set out in paragraph 15(1) of the Schedule which include Income Tax, Corporation Tax, PAYE, NIC, VAT, Insurance Premium Tax, and Stamp Duty Land Tax. References to ‘tax’, ‘taxes’ or ‘taxation’ are to UK taxation and to all corresponding worldwide taxes and similar duties in respect of which the Group has legal responsibilities.

The group tax strategy focusses on 3 aspects:

1. Tax governance and tax risk management

Tax governance and tax risk management are part of the global NEC group risk and compliance processes. Tax governance and control processes are set up in such a way that any tax filing required by law will be submitted timely and accurately and payments of taxes due will be paid in accordance with the submitted tax filings. The group tax team will work closely with the NEC compliance division to identify, monitor and avoid any risk for timely and correct submission of tax declarations and payment of the taxes due within the framework of the tax governance and control processes. For Compliance work we have a 2-step review process in place to facilitate added level of internal controls.

The group collectively agree the Tax Strategy and each group member takes responsibility for applying the principles through the below governance structure:

The group tax team will ensure that any material risk will be reported to senior management and board members to provide a general overview of the potential liabilities and to advise the senior management on how to mitigate and control these tax risks. Where required group tax team will also reach out to suppliers/customer tax team to ensure any type of incorrect invoicing or potential tax risk is eliminated and NEC is compliant.

The board ensures that risk treatment plans for material risks are put in place and ensures timely mitigation. Furthermore, as part of these overall governance and control processes, the group makes sure that the tax positions and any tax risks are correctly and appropriately accounted for in accordance with international accounting rules and standards.

In order to ensure the group operates within the tax compliance framework, periodic review of processes and documentation are performed and updated, if necessary, due to change of law; enhancement for the security of information; deployment of new products; and any other reason due to the business structure change.

Appropriate training is carried out for staff outside the tax team who manage, or process matters which have tax implications.

Advice is sought from external advisers and necessary actions are taken where appropriate.

2. Attitude towards tax planning and level of risk

The group manages risks to ensure compliance with legal requirements in a manner which ensures payment of the right amount of tax.

When entering commercial transactions, the group seeks to take advantage of available tax incentives, reliefs and exemptions in line with, and in the spirit of, tax legislation. The group does not undertake tax planning unrelated to such commercial transactions.

The level of risk which the NEC Corporation accepts in relation to UK taxation is consistent with its overall objective of achieving certainty in the group’s tax affairs. At all times the NEC Corporation seeks to comply fully with its regulatory and other obligations and to act in a way which upholds its reputation as a responsible corporate citizen. In relation to any specific issue or transaction, the Board is ultimately responsible for identifying the risks, including tax risks, which need to be addressed and for determining what actions should be taken to manage those risks. The board considers the materiality of the amounts and obligations when addressing these issues.

Group companies engage in international intercompany transactions. These transactions are closely monitored from a tax perspective on an “arm’s length” basis. These transactions are audited to ensure they are compliant with the Group’s transfer pricing policy. This policy is based on the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations issued by the Organisation for Economic Cooperation and Development (OECD). The group does not engage in any activities that are at odds with the BEPS principles outlined by the OECD.

The Tax Group is a key stakeholder in any project, providing necessary advice and undertaking appropriate due diligence. No entity is acquired or disposed of without the Tax Team’s involvement.

3. Engagement policy with tax authorities

The group engages tax authorities in a transparent, constructive and pro-active manner, in which it strives to establish a collaborative relationship with the relevant departments of any tax authority. If, and when necessary and possible, the NEC Group will actively reach out to tax authorities to clarify both the NEC Group’s long term tax position as well as short term uncertainties by requesting upfront explanations, clarifications and agreements.


Date published: 31/03/2024

List of entities covered by this Tax Strategy