UK Tax Strategy
The Citizen Group has many subsidiaries/related parties that are primarily engaged in manufacturing/distributing precision/electronic devices under the control of Citizen Watch Co., Ltd. (“CWC”) and operates watches and clocks, electronic/precision devices and machine tool business all over the world.
This document sets out the tax strategy of the Citizen Systems Europe GmbH. (CSE), controlled by CWC, a company incorporated in Japan.
This document is published in accordance with Section 161 and Paragraph 19 (4) of Schedule 19 of the Finance Act 2016 and is for the year ended 31 December 2019 and has been approved by the board.
2. Tax Strategy
We believe that the nature of CSE is relatively straight forward as are our UK tax affairs, and we aim to be a responsible taxpayer. As one of Citizen Watch Co., Ltd (Citizen) Group entities, CSE is guided by the Citizen Group Code of Conduct.
The Citizen Group Code of Conduct stipulates that we shall observe the local laws and ordinances of countries and regions where business operations are performed, so that the products and services provided can be accepted by the society as items with true value. In relation to Citizen Group’s tax affairs and operations, Citizen Group strives to ensure that the appropriate amount of tax is paid in compliance with each country’s tax laws, taking into account tax specific legislation in relation to transfer pricing, anti-tax avoidance measures, international tax and other statutes.
This document sets out CSE’s strategy towards its UK taxation matters and covers all operations carried out in the UK.
3. Tax Compliance
We are committed to meeting our tax compliance obligations on time and paying the right amount of tax in the right place. Within the UK we maintain tax accounting processes which support our filings to be made accurately and assist us to comply with relevant tax laws and regulations.
4. Tax Planning
We do not engage in any artificial tax arrangements. Tax planning is aligned with the commercial objectives of the business and as such tax is managed like any other cost within the business. Where available, we will seek to maximise shareholder value by utilizing tax reliefs and allowances prescribed by the legislation in the way in which such measures are intended to be used.
We aim to ensure that transactions between Group companies are conducted on an arms-length basis in accordance with appropriate transfer pricing rules. Where there is uncertainty or complexity in our business arrangements, appropriate external advice is sought.
5. Acceptable level of risk
We have a low tolerance for tax risk and take a prudent approach to managing tax risk. However, there is no pre-defined level of acceptable tax risk and each tax risk is assessed on a case by case basis.
6. Working with HMRC
CSE seeks to be a proactive and responsible taxpayer. We therefore aim to:
- act professionally and openly with HMRC at all times;
- make full disclosures in our tax returns;
- respond to any HMRC audit and enquiry on a timely basis; and
- work collaboratively with HMRC to resolve any areas of dispute.
In circumstances where an area of tax law is complex and may have a material impact to our financial position, we will also seek to have real time discussions with HMRC in order to gain certainty over the treatment for tax purposes and to avoid the potential for any future dispute.
7. Risk Managementand Governance arrangements
The Chief Finance Officer is responsible for the identification, prioritisation and monitoring of tax risk across the UK business, as well as the escalation of tax risk to the board of directors. The UK board of directors provides oversight in ensuring that tax is considered within the wider context of the business.