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Public UK Tax Strategy

Our UK tax strategy, which has been approved by the Board of KDDI Europe Limited and the Board of Telehouse Holdings Limited, has been published to satisfy the requirements of Schedule 19 of the UK Finance Act 2016 in respect of our financial year ending 31 March 2018. It applies to all of the UK taxation affairs of the UK subsidiaries of the KDDI Group (KDDI Europe Limited, Telehouse Holdings Limited, Telehouse International Corporation of Europe Limited, and Telehouse Management Limited), henceforth referred to as “KDDI UK”.

Introduction
KDDI UK, a sub-group of the Japanese based global telecommunication service provider KDDI Corporation, is a growing ICT solution provider based in London. It is the regional headquarters of the EMEA and CIS regions offering a host of ICT services as a ‘One-Stop’ solution, including Network, Data Centre, System Integrations, Voice, Cloud Computing, Security, IT consulting, and IT Outsourcing services. The excellent reputation and trust enjoyed by our TELEHOUSE data centres positioned around the world have kept us at the forefront of service and quality.
The KDDI Group pursues the enhancement of customer satisfaction and profit and also strives to fulfil its corporate responsibility by maintaining and enhancing its international tax compliance. Specifically, the KDDI Group complies with international rules and tax related laws and regulations in each country and region, and pays tax appropriately.
The overall vision for UK taxation is to maintain compliance through the operation of comprehensive risk management activities and a robust internal control framework to support achievement of the KDDI Group management objectives, whilst recognising that tax is an expense and, as such, KDDI UK will seek to pay tax appropriately in line with the commitments set out in the KDDI Group Code of Business Conduct and KDDI Group Philosophy.

We strive to fulfil our corporate responsibility to maintain and enhance tax compliance
KDDI Group has established a system to centralise the management of risks, which it defines as factors that have the potential to block the achievement of management objectives. The Corporate Risk Management Division, led by a general manager of the Corporate Risk Management Division, is the core of this system. To realise sustainable growth across the entire Group, KDDI Group companies, including subsidiaries and other affiliates, operate and maintain a Group wide internal control system, and engage in risk management activities. The Board of KDDI Corporation is responsible for defining basic policies for internal control systems for the KDDI Group, and the Corporate Risk Management Division is responsible for assisting Group companies in implementing those systems, supported by Internal Control System Directors and Managers.
The CFO of KDDI Europe Limited and Finance Director of Telehouse Holdings Limited are ultimately responsible for the implementation of the group wide internal control system for KDDI UK, in line with the requirements of the KDDI Group, as well as the day to day management and oversight of UK taxation risk, with the support of external tax advisers. Risk management activities include the ongoing identification and assessment of UK taxation risks, and the development and monitoring of an internal control system to ensure UK taxation risk is managed in line with the tax risk appetite. Management of UK taxation risk is supported by tax risk and control matrices prepared through a formal process undertaken in consultation with external tax advisers to identify and assess UK taxation risks and mitigating controls, as part of work to comply with the UK’s Senior Accounting Officer (“SAO”) legislation.
Where appropriate, UK taxation risks are reported to the relevant KDDI UK Board or, where material to KDDI Group, to the Corporate Risk Management Division, by the CFO of KDDI Europe Limited and Finance Director of Telehouse Holdings Limited.
KDDI UK is committed to complying with UK taxation legislation, and paying tax appropriately. Our tax risk appetite is aligned with the commitments set out in the KDDI Group Code of Business Conduct and KDDI Group Philosophy to support achievement of the KDDI Group management objectives. KDDI UK has defined rigid acceptable level of tax risk through the controls documented as a result of work undertaken to comply with the SAO legislation.

We pay tax appropriately to contribute to economic growth and fulfil our corporate and social responsibilities
KDDI UK seeks to achieve sustainable growth and increased corporate value over the medium to long term through sound business activities and fair trade with all customers and business partners. KDDI UK pays taxes that match its economic activities, place of value creation, and area in which taxes are paid. Furthermore, KDDI UK prevents the transfer of taxable revenue sources to non-tax or low-tax countries and regions (so-called "tax havens") to save excessively on paying tax, and strives to declare and pay taxes properly in accordance with the tax systems of each country. All intercompany transactions are conducted in line with the OECD arm’s length principle. We must also act in the best interests of KDDI UK’s shareholders by maximising revenues and minimising expenses. Government sponsored tax incentives and reliefs are utilised where applicable. Commercial business transactions are structured to ensure we pay tax appropriately in the context of the KDDI Group Code of Business Conduct and KDDI Group Philosophy to minimise expenses and support the sustainable growth of the business. KDDI UK does not enter into any artificial transactions with the intention of saving tax, or structure commercial transactions in a way which may cause reputational damage or negatively impact its stakeholders. KDDI UK seeks the advice of external tax advisers in situations where the application of tax legislation is unclear or where a skills or resource gap is identified in our internal team, to ensure statutory and legislative tax obligations are met. Appointment of external tax advisers must be approved by the CFO of KDDI Europe Limited or Finance Director of Telehouse Holdings Limited and any advice received is reviewed by either the CFO of KDDI Europe Limited or Finance Director of Telehouse Holdings Limited for its compliance with this tax strategy.

We engage in dialogue and work cooperatively with HMRC
Through submitting tax information in a timely, appropriate manner, KDDI UK increases its transparency to build a relationship of trust with HMRC. We respond to any queries from HMRC promptly, and in an open, transparent and constructive manner to seek timely resolution. We proactively engage with HMRC, when necessary, when any past, current or future tax risks arise, and to seek advice on the interpretation of tax legislation and reduce tax risk.