Introduction

In compliance with Schedule 19 of the Finance Act 2016, LG Electronics U.K. Ltd. (LGEUK) has published its tax strategy for the financial year ending 31^st Dec 2023. This tax strategy sets out our approach to managing LGEUK’s tax affairs in accordance with relevant laws and regulations and in line with the LGE Group’s tax policies.

Scope

This strategy applies to “UK Taxation” (taxes and duties set out in paragraph 15(1) of the Schedule 19 of the Finance Act 2016), covering Corporation Tax, Customs and Excise Duties, Employment Tax, Indirect Taxes, Stamp Duty Land Tax and any other tax liabilities in respect of which LGEUK has legal responsibilities.

LGEUK is committed to full compliance with all statutory obligations and disclosure to tax authorities. The firm’s tax affairs are managed in a way which takes into account the group’s wider corporate reputation. LGEUK follows relevant regulations and the tax authority’s guiding principles for its tax administration.

About us

LGEUK was incorporated in the United Kingdom in 1987 and is engaged in the distribution of electronic products and electrical appliances. LGEUK’s business consists of home entertainment, home appliance, air solution and vehicle component solutions.

Ultimate Parent Company

LG Electronics Inc., incorporated in the Republic of Korea (1958), is the ultimate parent company of LGEUK.

Compliance of Conduct

We follow a transparent management practices as the foundation to achieving individual success and global competitiveness. LG Electronics pledges to comply with local laws and regulations, compete fairly, and uphold the highest standards of business conduct. The LG Electronics Compliance Code of Conduct sets forth clear standards for legal and regulatory compliance all employees should live by in order to realize the principles provided in the LG Code of Ethics.  This is in compliance with Jeong-Do Management (Doing the right thing at all times, never failing to comply with the company’s core principles).

Tax Risk Management

It is Group’s Tax policy to protect LGEUK from tax risks by identifying, anticipating and managing various tax. We operate with a minimum level of risk.

LGEUK maintains appropriate tax accounting arrangements covering the framework of responsibilities, policies, people and procedures in place for managing tax compliance risks and the systems and processes which put the framework into practice. It is established with the support of Tax, Legal, HR, Finance & Accounting and other related departments. Day-to-day tax affairs are managed by the head of tax who reports to Chief Financial Officer (CFO).

• LGEUK operates a system of tax risk assessments and controls as a component of the overall internal control framework,

• LGEUK maintains necessary processes and controls which are designed to minimise the risk of errors that could impact the amount of tax calculation and payment,

• These processes and controls are regularly monitored, reviewed and tested by the tax team,

• Our financial reporting system and its sub modules are capable of generating appropriate reports for various returns to monitor and control overall tax management,

• We update relevant stakeholders with legislative changes in a timely manner and implement the changes,

• Compliance activities relating to different taxes are allocated to appropriate process owners, who carry out periodic reviews for any updates and changes,

• Periodic training is carried out for the related process owners, employees, workers and associated persons who are considered as exposed to risk,

• LGEUK takes advice from independent external tax, legal and accounting firms to ensure that our risk management decisions are based upon the latest and most relevant interpretations of laws and regulations.

Ultimate responsibility for LGEUK’s tax strategy and compliance lies with its Board, which is also committed to the prevention of any criminal facilitation of tax evasion (under the UK Government Criminal Finances Act 2017). Executive responsibility for the delivery of tax management is with CFO who also acts as the Senior Accounting Officer (“SAO”) for LGEUK.

Attitude to tax planning

The management of our tax affairs is focused on ensuring that we file all tax returns on time and pay the amount of tax due to meet our statutory obligations. When dealing with the firm’s own tax affairs, we focus on the following:

• LGEUK does not undertake any tax planning unrelated to our commercial transactions,

• LGEUK will not enter into any transaction that could produce an abusive tax result,

• LGEUK does not undertake transactions that are designed solely to create a tax benefit,

• LGEUK does not use any tax avoidance schemes or aggressive tax planning,

• Where we contract with suppliers and customers we ensure we deal with our tax obligations correctly and the Tax Team review all contracts along with legal and other related departments,

• Where uncertainty arises due to complexity or ambiguity in interpretation of tax laws or related legislation, the Tax Team will seek advice from external tax experts and tax authorities,

• LGEUK complies with its regulatory and other obligations and acts in a way which upholds its reputation as a responsible corporate citizen,

• The Group companies’ transactions are conducted at an arm’s length principle in accordance with OECD principles.

Level of risk

The level of risk which LGEUK accepts in relation to UK taxation would be either extremely low or none. Our approach to tax risks follows the same principles that apply to all other business risks in consideration with our reputation and corporate social responsibility.

Given the nature of our business (a subsidiary of an international entity) inherent risks will inevitably arise from time to time being a limited risk distributor but we take appropriate measures to comply with applicable tax laws, regulations and guidelines.

In relation to any specific issue or transaction, the Board is ultimately responsible for identifying the risks, including tax risks, which need to be addressed, and for determining what actions should be taken to manage those risks.

Business Risk Review

LGEUK has been under HMRC’s periodic Business Risk Reviews and we adopt a lower risk approach to managing our tax affairs.

In 2023 HMRC’s Customer Compliance Manager (CCM) carried out the necessary checks related to system and delivery, governance and approach to tax compliance and awarded LG Electronics U.K. Ltd. with overall low risk status indicating that LGEUK’s support and transparency indicate a good and collaborative relationship with HMRC, as LGEUK used to have in the past.

Incentives and reliefs

LGEUK seeks to utilise available tax incentives, reliefs and exemptions in line with relevant tax legislations.

Relationship with HMRC

We have an open and constructive engagement with HMRC on matters relating to our tax affairs. We share information about our commercial developments or transactions, especially where there are complex tax treatments. Where necessary we will seek formal or informal clearance from HMRC on uncertain tax positions insofar as they relate to our tax affairs.

Being a large business in the UK, we have an assigned senior tax expert called a Customer Compliance Manager (CCM) from HMRC to support and ensure our compliance. It involves building in-depth knowledge of the business and the sectors we operate in.

We have regular communications and periodic meetings with the CCM. We also have periodic visits from other tax compliance officials that make our relationship open and transparent. We ensure that the following controls and process are in place:

• Filing all tax returns and paying the tax due to the relevant tax authorities on time,

• Follow relevant tax disclosure requirements,

• Periodic reviews on internal system to identify and eliminate possible errors,

• Robust tax compliance procedures to support the tax returns and payments thereon,

• A well established working relationship with HMRC,

• Regular communication including training to relevant teams,

• Obtaining advice from external tax experts and HMRC in case of complex matters,

LGEUK’s Tax team adheres to the guidelines set by the authorities and acts with integrity and open communication.

We believe that having an effective tax control framework is key to an organisation and conduct continuous reviews of our systems and processes to ensure tax compliance.

LGEUK makes the necessary rectifications of material errors or misstatement in tax filings where permissible and/or required by law and practice without undue delay. Any unintentional errors in submissions made to Tax authorities are fully disclosed as soon as reasonably practicable after they are identified.

Board’s Approval

This document is approved by the Board of Directors (the “Board”) of LGEUK and periodically reviewed and updated.