Tax Policy

1. Purpose of the Tax Policy TAIYO YUDEN Group has CSR Charter and CSR Code of Conduct which clarify its social responsibility and the rules for its conduct and stipulate compliance with all laws and international rules and their purport. CSR Code of Conduct includes reference to taxes. By detailing it as a separate document, we clarify our tax policy.
2. Basic Policy TAIYO YUDEN Group believes that balancing (compatibility) between social values (compliance/CSR activities) and economic values (pursuit of return to shareholders) will enhance its corporate value.
   This is also true for tax accounting. We will enhance our corporate value by balancing (compatibility) between compliance (appropriate tax payment) and the application of tax rules to our business necessary to improve the shareholder value (appropriate tax savings).
3. Compliance Tax payment is one of the most fundamental social responsibilities of a company. Underpayment or overpayment of taxes may damage the social credibility or the corporate value of a company. Recognizing this, we will make appropriate and timely tax payment in accordance with the tax laws and regulations of the individual countries in which we operate.
   To that end, we obtain the latest tax information and improve our tax education program.
4. We are a Global Enterprise TAIYO YUDEN Group does not implement schemes or transactions intended to arbitrarily avoid taxes.
   TAIYO YUDEN Group adequately complies with international tax frameworks such as the OECD guideline and the BEPS project.
5. Appropriate Profit Distribution and Tax Payment on a Global Basis TAIYO YUDEN Group appropriately distributes profits among related parties in order to properly pay taxes in each country it operates its business.
   Appropriate profit distribution will be determined according to the functions and risk burden of the parties involved based on the arm' s length principle of the OECD guideline.
   TAIYO YUDEN Group maintains a distribution channel that can manage the profit distribution.
6. Relationship with Tax Authorities TAIYO YUDEN Group maintains a sound and cooperative relationship with tax authorities, and makes timely and appropriate response to them.
   We reduce tax risks and build trust relationships with tax authorities by making inquiries or using BAPA as necessary.

Established on October, 2018

TAIYO YUDEN Group sets up a tax management section to grasp tax return information of each group company, establish rules for implementing tax policies, and obtain risk information. We appoint a person in charge of tax affairs in each group company who reports to the headquarters and addresses the challenges with respect to tax issues. We also establish a system for gathering information and receiving advice through a network of external experts to address complex tax problems and country-by-country tax regimes. The executive officer in charge of management planning of the parent company is responsible for the tax governance. Critical tax issues are reported to the board of directors or the equivalent.

• TAIYO YUDEN Group grasps tax information and tax risk by gathering tax return and related information in standardized form every year and by examining them with external experts.
• For important contracts and transactions, we review the tax and other risk in related sections before management decision. We work to minimize the tax risk derived from our business by closely cooperating with each business units and related back-office sections.
• As transfer pricing has a great impact on corporate management, we strictly control profit margins of the group companies and monitor them on a monthly basis so that we can minimize the transfer pricing risk. In terms of important international intercompany transactions, we minimize the transfer pricing risk by concluding a BAPA with tax authorities and adhere to the agreed terms and conditions.

Note: We concluded BAPAs between the tax authorities of China/Korea/US and of Japan.