Tax Governance

The Board reviews tax governance report prepared by the responsible unit with tax compliance status and latest tax news inside every 6 months, which is the way the Board controls internal tax risk and knows global tax trend. Under the effective risk management framework, E.SUN controls the frequency and amount of tax disputes to a low risk level.

Item Description
Tax strategies Compliance and planning The system enhancement and process reformation improved the efficiency of daily tax treatments. In 2021, the working days of filing yearly various incomes of tax residents largely decreased. However, we still work hard on developing others tax systems and incorporating technology into the routine work to enhance efficiency and accuracy.
Succession planning Professional knowledge on taxes is passed down through the establishment of operation manuals, working papers, experience sharing and the establishment of the agent system.
Performance appraisal Tax personnel's performance is highly related to the annual tax work plan. Performance is evaluated via the achievement of goals. It is prohibited to adopt radical tax avoidance measures to obtain performance.
Tax risk management mechanism Three lines of defense Under the mechanism of three lines of defense and Key Risk Indicators, 5 low-risk anomalies were found in 2021. Therefore, we immediately made improvement action plans and executed the actions by the end of the year to ensure that tax treatments were in accord with tax laws and internal standards.
Board of Directors Using the risks identification and the three lines of defense mechanism, high-risk tax incidents will be reported to the highest governance unit, the Board of Directors.
Whistleblowing mechanism on tax incidents Whistleblowing hotlines and mail boxes are established for employees and stakeholders to report illegal or unethical tax-related matters.
The assurance process of tax disclosure Tax information disclosed in public channels such as the official website and annual reports is audited by a certified public accountant.

■ Stakeholder engagement and management

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.

■ E.SUN FHC income tax information for the past two years

The effective tax rate of E.SUN FHC in 2021 is 21.84% which is close to the statutory tax rate (20%) and the global average banking effective tax rate (20.90%) from CSA companion 2022. However, the cash tax rate decreased with that of 2020. Timing difference of paying the tax and COVID-19 are the main reason. In 2020, the central banks around the world announced the interest rate cut because of the outbreak of COVID-19, leading the profit of the banks below expectations. As Taiwanese companies pay the assessed income tax in May of the following year, the amount of tax we paid in 2021 decreased.

Unit: million NTD, %

2021 2020 Calculated averages
Profit before tax (A) 23,959 20,529 22,244
Reported taxes (B) 3,374 2,481 2,928
Reported tax rate (B)/(A) 14.08% 12.09% 13.16%
Adjustments (D) Temporary difference 222 212 217
One-time difference - 157 79
Tax-exempt income 1,636 1,786 1,711
Adjusted reported taxes (E)=(B)+(D) 5,232 4,636 4,935
Effective tax rate (E)/(A) 21.84% 22.58% 22.18%
ncome tax paid (F) 2,270 3,841 3,056
Cash tax rate (F)/(A) 9.47% 18.71% 13.74%

■ country-by-country reporting

E.SUN has 28 sites in 9 overseas areas, mainly in Asia Pacific financial center, Taiwan, China, Hong Kong and ASEAN. Through the integration of sites, E.SUN provides Taiwanese companies and local customers with cross-border financial services without interruption. The tax information in each tax jurisdiction is as follows:

Unit: million NTD / person

Tax jurisdictions Revenues from unrelated party Net revenue Profit before tax Income tax paid Income tax accrued (current year) Cross- jurisdiction revenues from related party Number of employees Tangible assets
Taiwan 60,129 72,238 19,171 1,523 2,829 536 9,201-9300 31,712
China 2,192 1,171 505 99 90 0 201-300 2,753
Cambodia 1,397 1,122 529 24 109 0 401-500 1,097
The United States 715 629 512 150 147 1 1-100 8
Hong Kong 2,506 2,394 1,742 246 257 299 101-200 27
Singapore 1,049 888 762 22 131 3 1-100 11
Vietnam 139 45 45 6 10 4 1-100 5
Australia 582 528 392 137 98 0 1-100 55
Myanmar 165 153 96 24 25 10 1-100 44
Japan 295 263 205 39 44 9 1-100 25

Notes: For the detailed information of current tax expense, cash tax paid, expected tax at statutory tax rate and others, please refer to the tax contribution report on E.SUN FHC official website.