Wacoal Europe Group Tax Strategy

Wacoal Europe Group Tax Strategy  

This document, approved by the Executive Board of Wacoal Europe, sets out the Group’s policy and approach to conducting its tax affairs and dealing with tax risks. The strategy is regarded as meeting the requirements under Schedule 19, Finance Act 2016 in the UK. It will be periodically reviewed and amendments will be approved by the Executive Board of Wacoal Europe. The current strategy in respect of the year ended 31 March 2022 will remain in effect until any amendments are approved.

The Group’s business is the design, manufacture, distribution and retail of ladies underwear and swimwear and covers multiple jurisdictions most notably the United Kingdom, United States of America and continental Europe. Our UK activity comprises design and administration functions, a distribution centre and retail stores. UK turnover represents approximately 32% of Group turnover.

The Group’s aim is to create long-term value for shareholders and we strive to be a responsible operator, corporate citizen and a good employer. Our business activities generate a substantial amount and variety of taxes. The taxes we pay and collect form a significant part of our economic contribution to the countries in which we operate and therefore the Group is committed to conducting its tax affairs consistent with the following objectives: 

  1. Complying with all relevant laws, rules, regulations, and reporting and disclosure requirements, wherever we operate.
  2. Maintaining constructive, professional and transparent relationships with tax authorities, based on the concepts of integrity, collaboration and mutual trust.
  3. Ensuring the Tax Strategy is consistent with its approach to risk, its core values and code of conduct.
  4. Ensuring that incentives and reliefs are not used for purposes which are knowingly contradictory to the intent of the legislation.

Management of Tax Risk

As a multi-national organisation with operations in several countries, the Group is exposed to a variety of tax risks which can be grouped under the following categories:-

  1. Tax Compliance and Reporting Risk – This covers risks associated with compliance failures such as submission of late or inaccurate returns, the failure to submit claims and elections on time or where systems are not sufficiently robust to support tax compliance and reporting requirements.
  2. Transactional Risk – This covers situations where transactions are carried out or actions are taken without appropriate consideration of the potential tax consequences or where advice is not correctly implemented.
  3. Reputational Risk – This looks beyond the financial risks to the wider impact tax risk may have on our relationships with our stakeholders, including shareholders, customers, tax authorities and the general public.

Managing the Group’s tax affairs is a complex process and as such there will inevitably be risks of error or omission within those processes which may result in the incorrect application of tax rules or calculation of tax returns. Eliminating tax risks entirely is impossible, and therefore there are no pre-described levels of risk that the Group is prepared to accept. However, the Group’s attitude towards tax planning and our general approach towards tax compliance means that tax risk is considered to be low.  

The Group attempts to be pro-active in identifying and evaluating risks in order to arrive at well-reasoned conclusions as to how they should be managed and monitored. 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.

In reviewing the tax risks associated with a specific decision or action the following should be considered:

  1. The legal and fiduciary duties of directors and employees.
  2. The requirements of our core values and any related internal policies and procedures.
  3. The maintenance of corporate reputation, having particular regard to the way we interact with the communities around us.

UK taxation is the overall responsibility of the Finance Director, with day to day management the responsibility of the UK Financial Controller. Significant tax matters are brought to the attention of the Executive Board and this strategy is approved, owned and overseen by the Executive Board. 

Tax planning

The Group only undertakes tax planning to the extent that it is supported by genuine commercial activity, and in these cases seeks to ensure that the Group’s affairs remain compliant with all relevant laws. 

In cases where the Group does not feel it has the necessary expert knowledge to assess the tax consequences adequately, external advice may be sought to support the Group’s decision making processes. 

Relationships with tax authorities

The Group is committed to the principles of openness and transparency in its approach to dealing with tax authorities wherever we operate around the world, and in particular to:

  1. Adopt open and collaborative professional relationships at all times with tax authorities.
  2. Engage in full, open and early dialogue with tax authorities to discuss tax planning, strategy, risks and significant transactions.
  3. Make fair, accurate and timely disclosure in correspondence and returns, and respond to queries and information requests in a timely fashion.
  4. Seek to resolve issues with tax authorities in a timely manner, and where disagreements arise, work with them to resolve issues by agreement where possible.
  5. Be open and transparent about decision making, governance and tax planning.

Approved by the Executive Board of the Wacoal Europe Group on 20th December 2021