Nippon Yusen Kabushiki Kaisha UK Group Entities’ (NYKK UK) Tax Strategy
Taxation is an important issue for NYKK UK and for our stakeholders, including our shareholders, customers, suppliers, employees and the broader global communities in which we operate.
Our business accounts for a variety of taxes. We pay corporate income tax, employment taxes, stamp duties and other taxes. In addition, we collect and pay employee taxes as well as indirect taxes such as VAT and excise duties to HM Revenue and Customs. The tax we pay and collect form a significant part of our economic contribution to the UK.
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NYKK UK regards the publication of this tax strategy as complying with its duty under paragraph 16(2) of Schedule 19 of the Finance Act 2016 to publish its group tax strategy in its financial year ending 31 March 2025.
Our commitment is underpinned by the following five principles:
1. Approach of NYKK UK to risk management and governance arrangements in relation to UK taxation
2. Attitude of NYKK UK to tax planning (so far as affecting UK taxation)
3. Level of risk in relation to UK taxation that NYKK UK is prepared to accept
4. Approach towards dealings with HMRC
5. People
1. Approach of NYKK UK to risk management and governance arrangements in relation to UK taxation
1.1 Tax Risk Management
The tax department at NYKK UK employs various risk management processes and systems to provide assurance that the UK’s group tax risk is appropriately managed. This includes compliance and risk monitoring systems and processes, communication with businesses and JSOX reviews of compliance activity across the group. NYKK UK and the tax department of NYKK UK is supported by oversight functions of group internal audit.
When implementing business transactions, we aim to understand the tax implications and risks associated with it and to provide vital UK Tax group oversight. To the extent that there is uncertainty, we engage and work with local tax authorities in a timely manner and to disclose and resolve any tax uncertainties. The diverse nature of our business means that it is not possible to eliminate all tax risks but the tax risk management process employed ensures that tax risk is appropriately managed.
1.2 Compliance
We seek to meet our tax compliance obligation by delivering our tax returns and tax payments on time and accurately. We have the appropriate resources, processes and controls in place to enable us to achieve this.
1.3 Governance and Accountability
Responsibility for the tax strategy, the supporting governance framework and management of tax risk ultimately sits with the NYKK UK board. Key risks and issues to tax are escalated to the NYKK UK board and / or NYKK tax department.
The General Manager of Tax – Europe Region owns and implements our approach to tax which is fully supported by the NYKK Tax Department based in Tokyo, Japan and by the NYKK UK Board. The General Manager of Tax – Europe Region is also responsible for ensuring that policies and procedures that support taxes management are in place, maintained and adhered to across the European region.
NYKK's code of conduct sets out what is expected of everyone at NYKK and our approach to tax aligns with that.
2. Attitude of Group to tax planning (so far as affecting UK taxation)
The commercial needs of the group are paramount, and all tax planning must have a business purpose.
We engage in efficient tax planning that supports our business and reflects commercial and economic activity. We do not engage in artificial tax arrangements.
We adhere to relevant tax law and we seek to minimise the risk of uncertainty or disputes.
We conduct transactions between NYKK group companies on an arm’s length basis and in accordance with current OECD principles and UK legislation.
Tax incentives and exemptions are sometimes implemented by the UK government and fiscal authorities in order to support investment, employment and economic development. Where they exist we seek to apply them in the manner intended.
We establish entities in jurisdictions suitable to hold our overseas investments, giving consideration to our business activities, the prevailing regulatory environment available, and as appropriate in line with joint venture parties’ requirements.
3. Level of risk in relation to UK taxation that NYKK UK is prepared to accept
NYKK UK’s tax risk appetite requires that, where tax law is unclear or subject to interpretation, its adopted tax position is at least more likely than not to be allowable under applicable tax laws. NYKK UK group will ensure that its tax arrangements are straight forward and well understood with paramount focus on the commercial needs of the group.
4. Approach towards dealings with HMRC
We seek to build and sustain relationships with HMRC that are constructive and based on mutual respect.
NYKK UK is committed to the principles of openness and transparency in its approach to dealing with HMRC wherever we operate. All dealings with tax authorities and other relevant bodies will be conducted in a collaborative, courteous and timely manner.
NYKK UK undertakes annual meetings with HMRC to discuss current and future business activities and fully informs HMRC on all significant activities. We seek guidance from HMRC on points of law where there is uncertainty.
NYKK UK is committed to complying with tax law in a responsible way and to having an open and constructive relationship with HMRC and with any other governmental bodies.
5. People
The tax affairs of NYKK UK are managed by a team of suitably qualified tax professionals, supported where appropriate by external advisors, NYKK tax department and by NYKK UK board. Training is provided to staff to ensure that tax compliance is carried out with a suitable level of diligence and technical expertise.
Companies covered by NYKK UK Tax strategy
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CAUTION - NOTICE regarding BOGUS Recruitment Campaign
It has been brought to our attention that a large-scale maritime officer’s recruitment campaign in the name of a NYK Group Europe is being announced to the seafarers all around the world.
We would like to bring to the attention of all concerned that this is a bogus campaign. None of the NYK Group Companies have arranged any such campaign and we, NYK Group Europe Ltd do not recruit seafarers directly and as such we are NOT involved in such bogus recruitment campaign in any way.
Seafarers are recruited regularly by our NYK Ship Management Company (based in Singapore), as and when required, and we do NOT conduct any such large-scale seafarer’s recruitment campaign as we develop, groom and train most of our seafarers from our own in-house Cadet program.
Seafarers who are interested to work on NYKSM managed vessels may contact us directly through the contacts as mentioned on the NYK Ship Management website.
GENDER PAY REPORTING - Commentary
Background
As you may be aware, all companies with more than 250 staff employed in the UK are required by law to publish their gender pay differentials.
The data set out below is that required by the UK Government, and is based on the NYK Group Europe Limited (NGE) payroll as at 4th April 2017, to be published by 5th April 2018. It should be noted that, this data does include NGE's former Liner Division.
NGE current position
Senior Management of NGE are fully committed to address diversity issues going forward and have been for some time. In our view, the data above paints a somewhat limited picture and we would like to provide some additional insights and to identify some of the actions we have taken, and will continue to implement in the future, to ensure that this situation continues to be addressed and improved.
Explanation for NGE current position
There are two primary reasons for the differential in gender pay:
While Senior Management acknowledge these as the key explanations for gender pay differences, it is recognised that neither of these are issues that can be addressed in the short term. However, they are a key focus for Senior Management in tackling gender pay inequality.
Job Grading
The data above only reflects the difference in male vs female pay and does not take into account pay for equivalent roles. One of the major reasons NGE introduced Job Grading a few years ago was to ensure we can look at equivalent pay for equivalent roles. If we look at the differences at the various job grades we can see the following pattern:
This reflects the gender spread with females mainly in the lower grades.
Length of Service by Grade
You will see from the chart below that, with the exception of Grade D, the male length of service is longer. It also shows quite clearly that length of service does relate to progression with service at the most senior grades between 15 and 20 years (approx.):
Average Salaries by Grade
The below chart shows the difference in average salaries for each of the genders by grades.
This does indicate that for two Grades C and G - female salaries are higher than those of males for the equivalent roles. However, in Grades E and F - there are some quite significant differences which require further detailed analysis. It is good to know that there are some pockets of good practice which are not shown by the format of data required by the Government.
Other factors to consider
Distribution of Appraisal Ratings
One of the areas which we have recognised as a potential issue is the distribution of appraisal ratings and whether there is a possibility for underlying bias that could potentially distort the bonus distribution.
At the beginning of each new year Senior Management provide draft appraisal ratings to look at the distribution of the appraisal grades in each business and function. For this year and in the future, we will undertake more detailed analysis to review the gender distribution of appraisal ratings for each of the business divisions to check whether there is any underlying bias.
Flexible Working practices
To ensure we can maximise length of service and encourage individuals to continue working for NGE (and to return to work following parental leave), we have put in place a number of measures to allow flexible working.
While such flexible working may not directly impact on the pay differential, it should encourage colleagues to remain in the organisation and to increase their average length of service, enabling progression both within and through the grades.
While flexible working is not reflected in the Government required statistics, it is a key initiative for NGE. We need to continue to monitor this initiative to ensure it achieves the required outcome.
That said, we can agree that NGE Senior Management cannot be complacent and we need to continually review NGE's position. Senior Management remain committed to continue to review all aspects of NGE's employment package and practices to encourage diversity and address any gender pay issues that are within our control.
Conclusion
While we welcome the gender pay differential reporting, we do believe that it does not tell the full story in terms of NGE's approach and intentions.
The Trustees of the NYK Line Pension Scheme ("the Scheme") present the Annual Reports.
The Scheme commenced on 1 April 1958 and was governed by a Definitive Trust Deed and Rules dated 1 January 2008 and subsequent amendments. A consolidated Trust Deed and Rules was executed on 4 April 2018 to incorporate the original Deed and subsequent amendments.
The Scheme is a hybrid scheme. The members of the Defined Benefit (DB) section transferred to a new Defined Contribution (DC) section in 1992. Active members of the DB section in 1992 kept their accrued DB benefits and became deferred members of the DB section along with existing DB deferred members. Deferred DB benefits ceased future accrual in 2004.
The Scheme provides pensions in retirement (through purchased annuities), preserved pensions on leaving service and death in service lump sum and spouses benefits.
The Scheme was contracted out of the State Second Pension Scheme (and previously, the State Earnings Related Pension Scheme) until September 2006. The Scheme is a registered scheme under section 153 of the Finance Act 2004 and benefits from the favourable tax treatment afforded to such UK registered pension schemes.
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