Tax Policy
Eurocharm supports tax policies and incentives that encourage enterprise innovation and foster economic growth. The Company aims for its tax approach and disclosure to be transparent and sustainable in the long term.
Eight Commitments
- Act at all times in compliance with all applicable laws and regulations.
- Inter-company transactions are based on the arm’s length principle, in compliance with internationally accepted transfer pricing guidance published by the OECD.
- Be transparent in financial reporting. Disclosures are made in accordance with applicable regulations and reporting requirements.
- Do not use tax havens or tax structures whose sole purpose is for tax avoidance.
- Do not transfer value created to low-tax jurisdictions.
- Develop strong, mutually respectful relationships with tax authorities based on transparency and trust.
- Always consider tax as part of major business decisions.
- Analyze the operating environment and assess tax risk through a corporate management mechanism.
Tax Risk Management
Eurocharm is subject to tax laws and regulations in various jurisdictions in which it operates or conducts business. Any unfavorable changes in tax laws and regulations in these jurisdictions could increase the Company’s effective tax rate and have an adverse effect on its operating results. In order to effectively manage tax risks, Eurocharm follows internal control processes, identifies, assesses, and manages tax risks from regulatory changes and its business transactions, accounts for them appropriately, and implements and monitors controls over them.
Tax Governance
The ultimate responsibility for taxation management for Eurocharm and its subsidiaries rests with the Chief Financial Officer, who delegates day-to-day responsibility to the Controller. A team of qualified and experienced tax professionals supports the Controller to meet Eurocharm’s tax obligations. In addition, Eurocharm also leverages external tax service providers for complementary expertise. Eurocharm’s Audit Committee is delegated by the Board to oversee the quality and integrity of the accounting, auditing, reporting, and financial control practices of the Company through periodic review of certain major matters, including accounting policies and procedures, internal control systems, legal compliance, and corporate risk management, etc. Among these, tax compliance is included as part of the Company’s legal compliance.
Effective Tax Rate
The effective tax rates for 2023 and 2022 are 17.81% and 16.87%, respectively. The average tax rate for 2021 is lower than the Company’s operating site tax rate and the statutory income tax rate of 20% in the R.O.C. due to the preferential rental tax rate for KCN Khai’s 5 plant and Baishan II Industrial Zone.
Summary of Audit Committee Operations
The Audit Committee of the Company was established on June 21, 2013, and its members are three independent directors. All members elected an independent director as the convener and chairman of the meeting. Currently, independent director Jen-Tien Yuan serves as the convener and chairman of the meeting. The Audit Committee operates in accordance with the Company’s “Rules and Regulations of the Audit Committee” and reviews and decides the following matters: the Company’s financial statements, the Company’s auditing and accounting policies and procedures, the Company’s internal control system, significant asset or derivative transactions, the raising or issuance of marketable securities, the appointment, dismissal or compensation of certified public accountants, and the appointment or removal of financial, accounting or internal auditing officers. The independent directors, accountants, and supervisors of auditors and auditors conduct regular meetings at the audit committee meeting at least once a year. The Audit Committee held seven meetings in 2023, with an average attendance rate of 100%, and discussed a total of 18 audit-related motions.
On October 4, 2021, Ernst & Young Business Advisory Services Inc. was commissioned to conduct the “2021 Annual External Board Performance Evaluation.” On November 2, 2021, the “2021 Annual Board Member Self-Assessment” and “Functional Committee Member Self-Assessment” were conducted. The evaluation results for all assessments were considered “satisfactory,” and all the specified indicators were duly completed. The result was presented at the Board meeting on February 25, 2022. For more details, please refer to the Board Performance Evaluation Report (including the Functional Committee Performance Evaluation). On December 30, 2022, the “2022 Annual Board Internal Performance Evaluation and Board Member Self-Assessment” and “Functional Committee Member Self-Assessment”, which was presented to the Board on February 24, 2023. On December 26, 2023, the “2023 Annual Board Internal Performance Evaluation and Board Member Self-Assessment” and “Functional Committee Member Self-Assessment” were conducted. The evaluation results were considered “satisfactory”, which is expected to be reported on the Board Meeting of the first quarter of 2024.
| Title | Name | Experience (Education) |
|---|---|---|
| Chairman | Chen-Tien Yuan | Law-National Taiwan University MBA, Guanghua School of Management, Peking University Vice President, EY Management Services Inc. |
| Independent Director | Yen-Hsi Lin | Philosophy, Fu Jen Catholic University General Manager, DDI-Asia/Pacific International Ltd. (Taiwan) Senior Advisor, Asia/Pacific Region, Caliper Human Strategies |
| Independent Director | Yi-Jen Kuo | Transportation Engineering and Management, National Chiao Tung University Administrator, China Steel Corporation Manager, China Steel Aluminum Corporation President, China Steel Global Trading Corporation |
| Item | Unit | 2021 | 2022 | 2023 |
|---|---|---|---|---|
| Number of Meetings | times | 9 | 7 | 6 |
| Attendance Rate | % | 100 | 100 | 100 |
| Consideration of Motions | Pieces | 17 | 17 | 18 |
| Meeting Date | Content | Opinions and Suggestions from the Independent Directors and the Measures in Response |
|---|---|---|
| 02/24/2023 | ● Proposal to approve the business report and consolidated financial statements of 2022. ● Distribution of earnings. ● Self-assessment result of the internal control system and the Declaration Regarding the Internal Control System for the year 2022. ● The Company’s endorsement and guarantee for the subsidiary companies. ● The Company’s loan financing. ● The proposed acquisition of share rights through investment from the subsidiary company, Vietnam Precision Industrial No. 1 Co., Ltd. ● The acquisition of the right to land use of the subsidiary company, Vietnam Precision Industrial No. 1 Co., Ltd. ● The Amendment of the guidelines for managing subsidiary companies. | Unanimous consent |
| 05/09/2023 | ● The Company’s loan financing. ● The amendment of the acquisition of the land usage right of the subsidiary company, Vietnam Precision Industrial No. 1 Co., Ltd. | Unanimous consent |
| 06/20/2023 | ● The Company’s endorsement and guarantee for the subsidiary companies. ● The addition to relevant management guidelines of the Company. | Unanimous consent |
| 08/08/2023 | ● Proposal to approve the consolidated financial statements of the second quarter. ● The Company’s earnings distribution. ● The Company’s endorsement and guarantee for the subsidiary companies. ● The proposed investment in Treasure Zone Developments Ltd. from the subsidiary company, Eurocharm Innovation Co., Ltd. (B.V.I.) | Unanimous consent |
| 10/13/2023 | ● The appointment of the Company’s internal audit supervisor. | Unanimous consent |
| 12/26/2023 | ● The appointment of Ernst & Young LLP as an Independent Accountant for the Company’s 2024 Financial Statements. ● The Company’s endorsement and guarantee for the subsidiary companies. | Unanimous consent |