Investor Presentaiton slide image

Investor Presentaiton

Illustrative TMK Cashflow/Tax Leakage Diagram Indicative Effective Japanese Tax Rate 49.9% x (say) 10% + 50.1% x 35% = 22.5% (for example) This can be reduced by leverage at the onshore holder of the preferred shares (i.e. at the Japan Branch level) and can be impacted - up or down - by the extent of tax treaty relief available and the branch taxation position. With a TMK-TK hybrid approach, ETR potentially reducible to 12.5% to 20%. Payment of pre-tax dividends subject to 20.42% withholding tax. Potentially reducible under tax treaty, for example to 5% (Singapore) or 10% (PRC) or 15% (Australia). TMK level taxation should be minimal if managed correctly. Maximum around JPY2m per year. KPMG SPC 1 100% Dividends Investor 100% Interest is subject to 20.42% withholding tax. Potentially reducible under tax treaty, typically to 10% at best. Deductible amount of interest subject to "thin capitalization", earning stripping and transfer pricing rules. SPC 2 Interest No tax on repatriation from Branch to head office I Japan Branch TMK Dividends Ownership Real estate / Trust beneficial interest © 2023 KPMG Tax Corporation, a tax corporation incorporated under the Japanese CPTA Law and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Branch is subject to tax at approx. 31- 35% depending on circumstances. Additional non-profit based taxation may also apply As noted with a TK this can potentially he reduced to low 20%. Potentially 0% for genuine Korean resident investors, for a genuine TK arrangement. Offshore Japan Payment of pre-tax dividends subject to 20.42% withholding tax. This is fully creditable against tax liability of the branch (and refundable if in excess of tax liability). Pursuant to the 2022 Japan tax reforms, the WHT obligation on dividends payable on or after 1 October 2023 to domestic corporate shareholders that directly own more than one third of the total shares in a dividend paying entity is expected to be abolished. Document Classification: KPMG Confidential 6
View entire presentation