Approach to tax
Approach to tax
E.SUN carries out and complies with the letter and spirit of the tax laws to put sustainability into practice. We are committed to not using tax haven and low-tax jurisdiction for tax avoidance. We refuse to transfer value through special structure and arrangement which is not in accord with arm’s length principle. We realize transparency and afford reasonable tax. We set tax governance and transfer pricing policy to be the standard of tax matters.
| Principles of E.SUN Tax Governance and Transfer Pricing Policies | |
| Tax Compliance | Complying with the letter and the spirit of tax laws and regulations to file tax returns and prepare related documents. |
| Comprehensive Decision | Evaluating the impacts comprehensively and making tax strategies in accordance with local and international tax trends. |
| Transparency | Disclosing tax information in financial reports and annual reports regularly and publicly to ensure information transparency. |
| Proactive communication | Developing open and transparent dialogues with tax authorities to assist in improving tax systems. |
| Tax incentives | Instead of seeking abusive tax results violating the spirit of tax laws to decrease tax burden, we use legal and transparent tax incentives. |
| Business structure | Business structure and transactions shall reflect economic reality. No special arrangements shall be used to avoid paying tax. |
| Risk management | Evaluating potential tax risks and adopting appropriate strategies when we make tax decision. |
| Commercial substance | Related-party transactions shall reflect economic reality and the decision-making party shall bear risk and take reasonable profits. |
| Arm’s length principle | The trade terms of related-party transactions should be similar to non-related-party’s. |
Tax Governance and Risk Control Mechanism
The Board, the highest governance unit of tax, reviews the status of worldwide tax compliance and latest tax news every 6 months to control tax risk and know global tax trend. Below are the cases under the mechanism in 2023.
| Item | Case Description |
| Compliance and planning | In response to Global Minimum Tax, we invited tax consultants from international accounting firms to update global tax trends in 2023. We then engaged with suitable consultants to evaluate the potential impacts accordingly. |
| Risk management | The Board of Directors control the frequency and amount of tax disputes to low risk level, using risks identification and three lines of defense mechanism to oversee tax matters; the hotlines and mail boxes are established internally and externally to report illegal or unethical tax-related matters. |
| Succession planning | We employ qualified and trained tax professionals with the right levels of expertise. We share experience on tax through internal regular meeting and participate in seminar to make progress in tax; tax knowledge is well passed down by the working papers and workflow chart. |
| Performance appraisal | Tax personnel's annual tax work goal is set and evaluated by SMART principle. We prohibit tax personnel from using radical tax avoidance measures to obtain high rating. We then make annual tax work schedule accordingly. |
Stakeholder engagement and management of concerns related to tax
To reinforce public trust, we proactively contact stakeholders to discuss tax issues and engage in public policy advocacy on tax to support the improvement of tax environment.
Public tax advocacy -NGO
In 2023, it was our first time to participate in peer review held by international tax advocacy organization The B Team. Companies were assessed in 7 different aspects. After 3-month assessment, we got upper-average rating, showing that we indeed put responsible tax principle into practice.
Tax authorities
Our withholding and filing cases increased significantly in 2023 because of rising interest rate. When the tax authorities asked the reason of the changes, we cooperated with the authorities and provided supplemental information to let the authorities understand the industry trends and realize the supervision.
Peers and Banker Association
Since effective termination date of special reserve deposit policy is around the end of 2024, we discussed the possible supplementary measures with Banker Association in 2023 and proposed financial white paper together to make effort in the rationality of tax laws.
Independent Directors and Investors
Independent directors specialized in accounting and tax oversee our tax burden and risk through financial reports every quarter. We also disclose the changes in tax rates and tax information to the public to enhance tax transparency.
