1. Introduction

The objective of this Tax Policy is to formalize and communicate Pon’s worldwide tax strategy and the main principles of the tax organization and tax procedures. These procedures contain instructions and guidelines with regard to specific tax areas such as tax filings and tax audits.

Tax has an impact on the overall financial performance of Pon. As the tax position of Pon Holdings (Pon) is influenced by all subsidiaries (‘Pon OpCo’s’) this Tax Policy has to be executed properly in close co-operation with appropriate Pon management.

2. Scope

This Tax Policy is applicable to Pon Holdings BV and its subsidiaries in which it has controlling interest (hereafter together referred to as: ‘Pon’).

Furthermore, this Tax Policy applies to all taxes Pon is subject to such as –but not limited to- corporate income tax, state and local taxes, withholding taxes, VAT, vehicle taxes, real estate tax, wage taxes and customs duties. All taxes are hereafter referred to as ‘Tax’ or ‘Taxes’.

3.1 Tax Mission

Pon aims at creating and maintaining an optimal and efficient tax structure while being compliant with local laws and regulations in each jurisdiction Pon is operating in.

The Tax Mission is translated into the following main Tax Objectives:

• Compliance with Tax laws and regulations;
• Optimizing the Tax (cash) position;
• Enhancement of Tax awareness within the Group;
• Transparency to the Stakeholders.

Each Tax Objective is further detailed in the paragraph below.

3.2 Tax Objectives

3.2.1 Assuring compliance with Tax laws and regulations

Pon needs to comply with the Tax laws and regulations of each of the jurisdictions it operates in. Non-compliance with these obligations could affect the overall performance of Pon, as non-compliance may result in additional taxes, penalties, reputation damage and/or other consequences (e.g. increase in the burden of proof for positions taken in (local) Tax returns).

Pon instructs strict compliance with relevant Tax laws and regulations to each OpCo.

3.2.2 Optimizing the Tax (cash) position

Pon wants to optimize its tax position among others in the following areas and situations:

a. Mergers & Acquisitions

Investments and/or divestments in assets and/or shareholdings, as well as internal reorganizations and legal mergers, could have a material impact on the tax and financial position of Pon. Therefore, it is essential that in all M&A transactions Pon Tax is involved as from the beginning of the transaction process.

b. Transfer Pricing

Pon aims at avoiding double taxation by determining transfer pricing principles governing all transactions conducted internally within Pon. Pon has adopted the following principles:

• comply with OECD guidelines (arm’s length principle) and local tax transfer pricing legislation;
• prepare transfer pricing documentation;
• comply with corporate governance codes;
• create a level playing field for intra-group transactions, ensuring consistent remuneration, transaction accountability and transparency,
  To meet the above-mentioned principles Pon has adopted the following transfer pricing guidelines:

• Business income is to be attributed to the involved companies, observing functions performed, entrepreneurial risks taken and assets used;
• Pricing of intra-group transactions is to be supported by documentation evidencing their arm’s length character (benchmarking study);
• Cost of intra-group support activities and services are ultimately to be borne by the business entities to the benefit of which they serve while applying an appropriate markup;
• Intra-group transfer of company shares, branches and assets are to be priced at their arm’s length value, based on generally accepted valuation methods. In-house valuations are ideally to be validated by a third party.

Exceptions may exist in the case such transactions have no tax impact and/or consequences.

c. Intercompany Financing

With respect to Intercompany Financing Pon strives to ensure:

• an optimal Debt/Equity ratio both from a treasury and tax perspective;
• monitoring and controlling the tax effects of foreign exchange rate results;
• consistent determination of interest rates for intercompany interest- bearing financing that meets the following interest rate objectives:
• Transparency and simplicity of rate setting;
• Consistent approach to rate setting;
• Safe harbor identification of applied rates; and
• Dealing at arm’s length principles.

d. Subsidies (including grants and incentives)

Governments and supra-national organizations such as the European Union generally offer subsidies and (Tax) facilities to entrepreneurs who do business within their territory. Such subsidies are often granted in the form of a beneficial Tax credit or Tax Exemption.

It is Pon’s intention to pro-actively identify possibilities for such subsidies if needed through external (tax) subsidy experts.

e. Changes in Tax regulations

Pon keeps informed on developments in local as well as international Tax laws and regulations through (amongst others) tax technical literature, court rulings and regular contact with
external Tax advisory firms. By doing so, Pon ensures:

• compliance with Tax laws and regulations
• mitigation of adverse Tax consequences (to the extent possible)
• identification and utilization (to the extent possible) of Tax opportunities

3.2.3 Enhancing Tax awareness within Pon

Each level within Pon must realize that business transactions may have substantial Tax effects with material impact on net income of Pon and that local Tax issues and behavior could affect, and even jeopardize, Pon’s global tax position or the Tax position of local companies. Therefore, enhancing tax awareness has a high priority within Pon and is actively stimulated by Pon by putting Tax on the agenda of various meetings and seminars.

3.2.4 Providing transparency to Stakeholders

Pon strives for transparency towards its main Stakeholders (Executive Board, Finance Committee, Financial Statement Auditor and Tax Authorities) on financial figures including the Tax position of Pon. For that purpose Pon maintains a global financial reporting procedure in which Tax is embedded.