China Mobile International (UK) Limited - Tax Strategy
China Mobile International (UK) Limited - Tax Strategy
30 January, 2018
This document satisfies the requirement of Schedule 19 of the UK Financial Act 2016 to publish the UK tax strategy of China Mobile International (UK) Limited and its subsidiaries (collectively named as “CMI UK Group”) for the year ended 31 December 2017.
2. Introduction to China Mobile International (UK) Limited (“CMI UK”)
CMI UK is a company established in the United Kingdom in 2011. It is a wholly owned subsidiary of China Mobile International Limited (“CMI”), a Company incorporated in Hong Kong. The principal activities of CMI UK are the provision of telecommunication services, internet business and related supporting services including sales of telecommunication products.
3. UK Group overall tax mission
It is the CMI Group’s mission to be a future contributor of China Mobile’s global value and a trustworthy partner in the industry. To support this mission, CMI UK Group proactively undertakes the responsibility to fulfill all fiscal and tax obligations related to its businesses.
The UK tax strategy applies to indirect taxes, employment taxes as well as corporate taxes in the UK. CMI UK Group is required to comply with all the statutory tax obligations on a timely basis with full integrity. The determination of tax treatments must reflect the genuine economic activities and follow the latest and appropriate tax rules.
In addition, all the potential tax implication derived from the significant business events must be identified and analyzed prospectively, so that the potential tax exposures, if any, can be addressed at the earliest stage.
4. Tax risk appetite and potential tax risks
Although CMI Group does not define a rigid level of acceptable tax risks, it has a strong commitment to maintain a low risk approach to tax.
CMI UK Group actively identifies and minimizes the tax risks arising from its business activities. The main potential tax risks relating to CMI UK Group are identified below:
• Compliance risk
The corporate reputation may be adversely affected if CMI UK Group fails to meet the tax filing requirements or fails to follow the latest tax regulations. Tax penalties will also be incurred if CMI UK Group does not fulfil its tax filing and tax payment obligation on a timely basis.
• Operational tax risk
Misinterpretation of tax rules may lead to incorrect determination of tax treatment for business transactions. Significant time and costs could then be required to resolve tax controversies arising from such a situation.
To minimize the abovementioned tax risks and avoid reputational risk exposure, CMI UK Group engages advisors to assist with its local tax compliance, in order to ensure that the tax treatments adopted by CMI UK Group are in line with the latest tax rules, and all tax obligations are met on time.
5. Tax risk management and governance:
• Strong supervision on tax:
The low risk approach to tax is fully supported by the Board of CMI Group. Tax management is one of the core finance functions under the supervision of the Financial Controller and Chief Financial Officer (“CFO”) of CMI Group.
The day to day management of the tax affairs of CMI UK Group, is the responsibility of local finance teams, and overseen by the global tax team and Head of Tax. Updates on tax risks and developments in relation to the UK business are reported to local Management regularly. Significant tax and business developments are reviewed by the tax team and discussed with the Financial Controller and CFO, receiving formal sign off where appropriate. Board Approval is obtained for material transactions. The tax study and tax consequence analysis carried out by tax team and external tax advisors form part of the formal approval process.
• Comprehensive tax governance policies:
Tax governance policies have been implemented to ensure CMI UK Group’s tax filings are completed effectively and efficiently in compliance with local tax rules. We formally identify and document key internal controls in place to monitor, manage and mitigate relevant UK tax risks which are included in our policies. The policies are inspected and updated regularly to ensure continuous improvement of tax management in the CMI UK Group.
• Tax training program:
Comprehensive business tax trainings are provided to all frontline staff in order to promote the tax risk awareness of the CMI Group as a whole. Tax team is also encouraged to attend technical tax trainings and seminars held by global accounting firms and tax institutes in order to acquire the latest tax knowledges and gain more insights from the experienced tax practitioners.
6. Attitude to tax planning
With reference to the China Mobile Group’s Corporate Governance Report and Sustainability Report 2016, due attention must be given to the impact of business decision on regulatory authorities. China Mobile Group believes that proactive compliance with tax obligations is a fundamental social responsibility and the critical in creating long term value for the stakeholders.
CMI UK Group’s tax planning focuses on how to comply with the legal and tax obligations proactively. Engaging in aggressive or artificial tax planning is prohibited. In addition, CMI UK Group strives to address potential tax exposures relating to business operations before they occur. In order to identify all relevant tax consequences, reputable advisors are engaged early in the business process prior to significant changes to our operations or business model. They have also helped develop a global tax guide to help apply appropriate UK tax rules in our daily business operations.
An example of working closely with advisors to mitigate tax risk would be the Base-Erosion-Profit-Shifting project; where the external tax advisors informed CMI UK Group of all relevant OECD developments in order to ensure all the group entities have fulfilled relevant local tax rules.
7. Working with HMRC
In line with the CMI Group’s core values, CMI UK aims to build mutual trust with HMRC. It works with the HRMC with an open and cooperative attitude in order to develop an effective and respectful relationship.
CMI UK has actively monitored and analyzed the change of UK tax rules, in order to ensure that the latest tax rules are applied in the daily operation and significant business events. CMI UK seeks consultation and initiate discussion with the HMRC when it realizes that there may be different interpretation of tax laws between CMI UK and HMRC on the business transactions. Meanwhile, CMI UK promptly addresses the inquiries from HMRC with sufficient and accurate supporting information provided.
China Mobile International Limited
China Mobile International Limited (CMI) is a wholly owned subsidiary of China Mobile. China Mobile, the world’s leading telecommunications operator, has owned rich network resources, large customer base and high market value. In order to provide better services to meet the growing demand in the international telecommunications market, China Mobile established a subsidiary, CMI, in December 2010, mainly responsible for the operation of international business. Leveraging the strong support by China Mobile, CMI provides a full range of comprehensive international telecommunications services which includes IDD, roaming, Internet, MNC services and Value Added Business across the globe.
Headquartered in Hong Kong, CMI has expanded our footprint in 19 countries across different regions. We provide global telecommunication solutions, delivering high quality services on Voice, Data, Mobile and Value Added Businesses.
Implement the national strategy “Big Connectivity”, to build a seamless, carefree and borderless digital life globally
To be a future contributor of China Mobile's global value and a trustworthy partner in the industry
TRY Culture, Build Mutual Trust, Undertake Our Responsibility, Care For You