Compliance and Tax Strategy

Compliance

Introduction

Lows and regulations

Complying with laws and regulations is the requirement all individuals and companies must ensure. As a global leader, the Rakuten Group is looking beyond that - we are aware that we have a greater responsibility to fulfill.
We are committed not only to meeting minimum requirements, but also to proactively respond to high expectations from society in order to stay a responsible corporate citizen and to foster positive changes in the world.

Rakuten Group Regulations

RGR

Rakuten Group Regulations (RGR) are the set of common rules of the Group. They ensure that all employees adhere to the highest ethical standards and that a framework for effective corporate governance is in place, in order to maximize corporate value. The RGR consist of policies and instructions such as the Rakuten Group Code of Ethics and Principles of Rakuten Shugi which includes the Brand Concepts and the Five Principles for Success. They cover important topics such as compliance with laws and regulations, labor practices, information security, quality management sustainability and more.
Group-level rules are completed by company-specific regulations to address the specificities of each service when necessary.
RGR are updated twice a year to reflect fast-changing businesses and expectations from stakeholders and society.

Compliance Management

To ensure strong compliance management across the Group, the Rakuten Group has appointed a Function-CCO (Chief Compliance Officer), who, under the leadership of the COO (Chief Operating Officer), oversees overall Group-wide compliance. A Company Compliance Office is also appointed in each company* in order to strengthen group-wide compliance system by liaising with the Function-COO, promoting compliance programs and monitoring their effectiveness.
Under this structure, the Group Risk & Compliance Committee identifies risks that could hinder business strategy, promotes effective compliance at the Group level, shares best practices, and proposes compliance and risk management strategies. In 2019, subcommittees were set up to address the identified risks and compliance areas, engaged in risk mitigation, which was reported to and discussed at the Group Risk & Compliance Committee.
The Board of Directors receives reports jointly from the COO (Chief Operating Officer) and Function-CCO periodically and oversees overall compliance.

*Company: Rakuten Group is based on an internal company-system, an initiative designed to drive responsiveness to user and partner needs, delivering assured service quality and maximizing customer satisfaction in a rapidly changing market environment.

Rakuten Group Compliance Program

In order to continuously improve compliance activities and to address new regulations and expectations from stakeholders, Rakuten implemented a PDCA (plan-do-check-adjust) cycle called the Rakuten Group Compliance Program. The program consists of the following steps:

Rakuten Group Compliance Program
Identify Risks
Risks facing the Rakuten Group are identified based on risk assessment, reported incident information, and other concerns raised from top management and different departments.
Plan Solutions
The identified risks are prioritized and action plans are established accordingly.
Implement & Execute
Action plans are implemented and executed at the appropriate level - business, company and/or group following the Compliance Management Framework (see below)
Evaluate
Finally, compliance risk is mitigated through reviewing the group-wide operations and the compliance status with laws and regulations. The result of the review is reported to the Group Risk & Compliance Committee.
Compliance Management Framework
Responsibility
  • The organizational unit in charge or person in charge has oversight and authority for compliance with this issue
Policy / Rules
  • Ensure that the rules, policies or criteria are documented in a way that is clear, comprehensive and easy to understand
Processes
  • Create and document business processes to ensure that the policy can be followed consistently
Trainings /
Awareness
  • Conduct trainings so that all relevant employees are aware of the policy and processes
  • Have resources (policies, processes, related explanation materials) available at all times
Monitoring /
Self-check
  • Monitor compliance with the policy
  • Use self-check mechanisms to ensure processes are being followed

In order to conduct the Group Compliance Program smoothly, the headquarters maintains constant communication with Function CCO, Company Compliance Officers and the businesses, providing operational support from four angles: Audit, Communication & Reporting, Promotion, and Advisory.

headquarters support

Anti-Corruption

Policy

The Rakuten Group Anti-Corruption Policy, part of RGR, prohibits all types of corruption including, but not limited to, giving and receiving bribes either directly, or indirectly through third parties, facilitation payments, kickbacks, inappropriate gifting or receiving entertainment and illegal political contributions, donation, and sponsorship.

Rakuten Group Anti-Corruption Program

anti-corruption

We consider corruption a major compliance risk which can hinder us from achieving our mission. Corruption could happen in any part of the world and potentially poses a serious threat to Rakuten Group’s high level of business integrity.
In order to eliminate corruption, the Rakuten Group Anti-Corruption Program is implemented. Designed to prevent, detect and remediate corruption for all of our operations worldwide, the program covers the following perspectives:

Risk Identification
A bribe is typically made via third-party intermediaries, and thus due diligence is to be conducted to confirm that the intermediary is not associated with a corruption risk. It is to be done before engaging in mergers and acquisitions or investments as well.
Additionally, corruption risk assessment for the existing group operations ensures integrity in our business activities.
Raising Awareness
Training on anti-corruption is regularly conducted in order to ensure that all group employees fully understand what corruption is, the different forms it can take, consequences of involving corrupt practices, and how an offence can be reported.
Reporting
All employees are required to report any actual, suspected or potential violation of the Group Anti-Corruption Policy to the Rakuten Hotline, a confidential whistleblowing channel established within the Rakuten Group.

Anti-corruption compliance status and the implementation of the program is reported to the Board of Directors periodically.

Employees Engagement

Awareness and Training

In order to instill a strong awareness of legal and ethical compliance throughout the Rakuten Group and ensure all group employees are well-informed about its principles, communication and training activities on compliance with laws, regulations, and RGR are conducted for all group employees on an ongoing basis.
Specifically, morning meetings (Asakai) focused on compliance and business ethics are carried out and attended by all employees of the Rakuten Group, as well as e-learning on business ethics and RGR for all Rakuten Group employees.
Compliance pledges are collected from all executives and employees to make public statements on compliance and adherence to social norms, laws and regulations and internal rules.

Rakuten Hotline

Investigation Flow

The Rakuten Group has a whistleblowing system called the Rakuten Hotline where all group employees including not only full-time employees but also contract employees or temporary staff can report on illegal activity, violation of company rules and regulations, fraudulent acts or other ethical misconduct to inside and outside contacts.
The Harassment Help Desk is also available for reporting harassment-related complaints specifically, and to ensure that behavior constituting harassment is dealt with appropriately.
The confidentiality of whistleblowers is protected and any disadvantageous treatment for well-intentioned whistleblowers is prohibited.
All reported misconducts is investigated by the dedicated team for substantiating reports, and feedback is provided to whistleblowers that includes a conclusion, resolution and plans for improvement.
In all circumstances where a breach is substantiated, those involved in misconduct will be subject to disciplinary action in accordance with the provisions of the employment rules of the company.

Tax Strategy

Basic Approach

Rakuten Group’s mission is empowerment. By paying our fair share of taxes, we contribute to society and empower local communities and central governments to fund social, educational and cultural programs.

  • We adhere to the requirements of the local tax legislation in all countries and regions we operate, as well as to international tax rules and policies.
  • We file our tax returns and make tax payments on time.
  • We apply the “arm’s length” principle in our transfer pricing policies across the group, taking into account the latest guidelines from the OECD and the local authorities.
  • We believe in legitimate tax planning that is based on the spirit of the law and that reflects economic reality.
  • We pledge to respond to any tax violations by our employees or business partners of which we become aware in a serious and responsible manner.
  • We maintain an open and honest dialogue with the tax authorities.
  • We follow and comply with both the letter and the spirit of the tax legislation in all countries and regions we operate.
Hiroshi Mikitani

Kenji Hirose, our CFO (Chief Financial Officer) who is a Group Executive Vice President, is responsible for tax policy, and the department in charge of tax periodically reports to the CFO.

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