Initiatives of Internal Control
Epson's Principles of Corporate Behavior include Principle 5: "Ensuring effective governance and compliance." In Principle 5, Epson commits itself to eliminating all improper transactions, including those that involve bribery, corruption, cartels, and insider trading, and to pursuing fair, transparent, and free competition and appropriate transactions.
In respect to employees, the Epson Group Global Code of Conduct breaks down the actions of the Principles of Corporate Behavior and describes the conduct expected of us as Epson employees. This document likewise affirms that we do not seek profit by improper means and urges employees to immediately report it to relevant departments if there is any conduct that presents a risk of violation.
In respect to business partners, Principle 7 of the Principles of Corporate Behavior is "Working with business partners for mutual benefit." This principle strictly forbids acts of bribery and collusion in our relationships with business partners and demands that our business partners also eliminate any illegal or unethical business practices. In addition, our Anti-Bribery and Competition Law Guidelines for Business Partners demand that business partners avoid the practice of business bribery and that they promptly notify concerned Epson companies if they discover any such act by an Epson employee.
Epson Group Anti-Bribery Regulation
The Epson Board of Directors is committed to preventing any bribery on the part of Epson. To that end, in 2014 we established a system to prevent bribery, along with rules to be followed. These make up the Group regulations that apply to all Group companies.
The regulations state that Epson employees must not offer bribes to public servants and the like. Moreover, we establish a bribery prevention system, for which the President is ultimately responsible. Under this system, supervisory departments take various measures to prevent bribery.
One of our designated priority company-wide serious risks is a violation of Anti-Bribery Regulation. As a prevention initiative, we draw up and execute plans to suppress the risk of bribery and corruption. We monitor the progress of this work and evaluate the effectiveness of bribery suppressing efforts.
Epson's department responsible for compliance conducts our bribery prevention activities as based on Epson Group Anti-Bribery Regulation. The wide-ranging activities cover 12 areas, including entertainment and gifts, donations, hiring and internships, penalty, education by external experts, agent management, sponsorships, and procurement management. The various supervisory departments work together to tackle the risk of bribery.
Compliance Permeation Activities
To ensure that compliance awareness permeates the Group, Epson provides online courses, training, and more on a regular basis to both general administrative managers and employees, in keeping with the Epson Group Global Code of Conduct.
We invite outside experts to give instruction in compliance training courses for executive management. We also provide compliance online courses and compliance training by internal instructors for all employees. At our affiliates outside Japan, our efforts include giving compliance trainings that reflect local conditions.
Every October is "Compliance Month" at Epson and this is to help each employee recall the importance of compliance to the realization of the Management Philosophy. During this period each year, we run events for the entire Group, including subsidiaries outside Japan, to raise compliance awareness based on our Management Philosophy and Principles of Corporate Behavior. Specific activities include: 1) the release of Compliance Messages by the Chief Compliance Officer and persons in charge of each business divisions/ group companies, 2) the publishing of feature stories on compliance in the company newsletter, 3) initiatives to spread information about the Epson Group Global Code of Conduct, and 4) giving compliance training. These and other activities are meant to raise compliance awareness.
When the "Compliance Month" is over, we conduct a survey about these initiatives. We total and analyze survey responses as to participants' opinions and suggestions on each company's or organization's efforts and initiatives. This helps us check employees' compliance awareness and collect feedback for the next year's activities.
Global Compliance Activities
Epson has built and is operating an RCCO (Regional-CCO) organizational system centered on the CCO in order to expand compliance activities globally. Since different regions of the world have their own languages and cultural norms, the sales company that supervises a region leads the compliance activities in that region, and Group companies cooperate to carry out the activities. We have established a vision of compliance management to which Epson aspires and are implementing a Global Compliance Program to continuously raise the compliance level and realize this vision. We have introduced these policies to Group companies in Japan and overseas, and are working to achieve our goals by spreading compliance policies, issues and measures throughout the company.
International Trade Initiatives
Epson is a multinational corporation with production centers, sales centers, customers, and business partners around the world. Smooth international trade operations are essential for delivering Epson products and services to customers in a timely manner.
Meanwhile, we must observe numerous conventions and frameworks governing international trade that have been put in place to maintain international peace and security.
To maintain compliance with these and to ensure smooth trade, Epson has established comprehensive systems and processes that have enabled Group companies to earn certification from the relevant authorities for compliance with international trade programs. (See the table below.)
|Seiko Epson Corporation||Special general bulk export license
(Ministry of Economy, Trade and Industry)
|The program grants a blanket license to export certain items (or provide certain information) to certain destinations without an individual application if an export control system is found to be in place.|
|Seiko Epson Corporation||Authorized exporter
(Ministry of Finance, Tokyo Customs)
|The program enables certified parties to get export permission even if goods are not brought into a bonded facility, etc., if an export security control and compliance system is found to be in place.|
|Seiko Epson Corporation||Authorized importer
(Ministry of Finance, Tokyo Customs)
|The program enables certified parties to separate import declarations from tax declarations and accept goods before filing a tax declaration if an import security control and compliance system is found to be in place.|
|Epson America Inc.||Customs-Trade Partnership Against Terrorism (C-TPAT)
|The program is designed to strengthen security of goods imported to the US and security of import channels to the US.|
|Epson Portland Inc.|
Business Continuity Management
Epson has a solid business continuity management program in place. For many years we have taken action to prevent and manage disasters, but the program really got started in 2006, when we formulated a business continuity plan (BCP) for what was then our liquid crystal displays business.
If a disaster or some other event impacts business at an Epson Group production site, our first priority is to ensure the safety of our employees. Next, we take steps to ensure continuity of the product supply so as not to inconvenience our customers. In order to provide a steady supply of products, particularly consumables and core components such as quartz and semiconductor devices, print heads, and small liquid crystal panels, we have preparations in place that allow us to limit damage, secure repair parts, switch to alternative producers, and restore operations in line with established procedures. We conduct exercises to check our procedures and ensure their effectiveness. Mission-critical IT systems and critical data that are essential for business continuity are consolidated in a robust data center, and backups are at the ready in the event of a disaster. We have secured multiple distribution routes to enable us to immediately switch to alternative routes in response to any disruption in international shipping and transport. In addition, our finance, accounting, public relations, and other key corporate functions have established BCPs so that business can continue in emergencies.
Meanwhile, we ask the companies that make up our supply chain to strengthen their BCPs, and we check to see how established those BCPs are. We analyze the items we purchase, and we develop multiple sources for those that are most important. When we cannot secure multiple sources, we keep an inventory of goods on hand or try other means to ensure continuous production in the event that something should happen to a supplier.
Every business and site in the Epson Group will continue to refine its BCP to ensure that it has the resilience to withstand threats to business continuity going forward.
Tax Compliance Policy
Epson seeks to fulfill its corporate social responsibility by paying appropriate taxes in compliance with the spirit as well as the letter of the tax laws and regulations in the countries and regions where it operates. In accordance with this basic policy on taxes, we are taking the actions below to maintain and improve tax compliance.
- Tax governance
- The Board of Directors is responsible for overseeing tax risk, and Epson's Chief Financial Officer is the responsible official of Group tax affairs. The group that is in charge of tax affairs reports and manages taxes is under the supervision of the Chief Financial Officer.
- Epson considers tax risk to be an important risk, and regularly reports such risks to the board of directors and the Corporate Strategy Council, which is composed of directors of the company.
- Employees are trained in the tax-related regulations and business process standards that Epson has established to ensure that it properly fulfills its tax obligations. We conduct periodic internal tax audits and report the findings to top management and to the Audit & Supervisory Committee.
- Monitoring tax affairs
- We appropriately respond in a timely manner to changes in local tax systems and taxation trends through regular reporting among the group that is in charge of tax affairs and Epson's local subsidiaries.
- We enlist the support of tax accounting firms and other external experts for advice on taxes and for tax support in each country and region.
- Tax planning and Tax avoidance
- Around the globe, we strive to effectively use preferential taxation systems where possible in our normal business activities to ensure a suitable tax burden.
- We do not transfer value created to low tax jurisdictions, and do not use tax structures intended for tax avoidance without the spirit of the law.
- Dealing with uncertainty
- Tax risk uncertainty is expected to increase as countries and regions around the globe strengthen their tax reporting obligations, tax audits, and tax enforcement. Epson controls tax risks by identifying situations that could potentially pose serious tax risks.
- Transfer pricing taxation
- Epson complies with local tax laws and OECD guidelines to control transfer pricing tax risks. We have established transfer pricing guidelines for the Epson Group to help ensure appropriate transfer pricing transactions. In line with these transfer pricing guidelines, we control the profitability range of our global subsidiaries to ensure that transactions are made at arm's length.
- We use an advance pricing arrangement (APA) for transactions with subsidiaries in high-risk countries.
- Anti-tax haven rules (also known as Japanese Controlled Foreign Company rules, or "CFC")
- Epson sets up foreign subsidiaries to carry out its ordinary business activities, but does not do so in "tax haven" jurisdictions to avoid taxes. When anti-tax haven rules apply, Epson properly files and pays taxes.
- Relationships with tax authorities
- Epson strives to work in good faith with tax authorities and to maintain and improve good tax corporate governance.