Initiatives of Internal Control

Compliance Activities

Epson practices compliance under a system to ensure that all applicable laws, regulations, company rules, and business ethics are observed. We engage in a variety of activities to meet the expectations of society. The Epson Way (comprising the Management Philosophy, Principles of Corporate Behavior, and Epson Global Code of Conduct) sets forth the Epson Group’s shared values and expectations of conduct, forming the foundation for our compliance efforts. To deeply root compliance awareness and ensure effectiveness, we have translated the Epson Global Code of Conduct into more than 10 languages and, every year, remind officers and employees of the expectations through educational activities.

For the executive management team, we invite an outside expert to hold an annual compliance training seminar. In addition, we provide a wide range of compliance training opportunities to officers and employees, including online courses and rank-specific training by in-house instructors. Epson Group companies outside Japan provide compliance training and carry out programs that reflect local conditions.

October is Compliance Month at Epson. One of the things we do across the global Epson Group during the month is to remind employees of the Epson Way, the foundation on which our business activities rest, and urge them to maintain high ethical standards. We raise compliance awareness by having the chief compliance officer and the heads of our business units and subsidiaries issue compliance messages, familiarizing employees with the Epson Global Code of Conduct, requiring compliance training, and conducting a compliance consideration survey.

All Epson Group companies have compliance training courses. In Japan, the course completion rate is nearly 100%. We conduct compliance consideration surveys. The survey answers are evaluated and analyzed for each department and Group company, and the findings are used to drive improvement.

Global Compliance Activities

The Epson Group shares a common goal of creating a safe environment in which all employees can shine and managing compliance in pursuit of higher goals. To achieve this, we have introduced the Global Compliance Activities throughout the Group, setting targets for each fiscal year, evaluating the compliance systems and operations of each organization and subsidiary, and promoting improvement activities. We implement this PDCA cycle to raise compliance levels across enterprise-wide and minimize risk.

Global Compliance PDCA

R-CCO Organization

Within this system for promoting the Global Compliance Activities is a Regional Chief Compliance Officer (R-CCO) organization that is led by the Group’s CCO. This system takes into account national and regional differences in language, culture, and customs and divides the Group's subsidiaries into five blocs, with the holding company that supervises a region leading the compliance activities in that region. Under this system, the subsidiaries cooperate with each other to implement compliance activities. The CCO and R-CCOs meet twice a year to steer the direction of compliance activities for the Group's subsidiaries. In addition, the blocs work toward meeting their goals by holding area meetings, developing their own compliance activities, implementing Group-wide compliance policies, and addressing issues.

Anti-Corruption/Anti-Bribery Initiatives

Basic Principles

Principle 5, “Ensuring effective governance and compliance,” in Principles of Corporate Behavior, states that we will not tolerate any form of bribery, corruption, dishonest marketing, cartels, insider trading, or conflict of interest and that we will conduct all transactions in accordance with these principles, promoting fair and open competition in the marketplace.
To put this principle into practice, Epson created the Epson Global Code of Conduct, which explains how employees are expected to implement the Principles of Corporate Behavior and the actions they are expected to take. The code impresses upon employees the need to seek profits by proper means and to immediately report conduct that is or could lead to a violation.

Principle 7, “Working with business partners for mutual benefit,” in Principles of Corporate Behavior strictly forbids acts of bribery and collusion with business partners and demands that our business partners adhere to a zero-tolerance policy regarding illegal and unethical business practices. Moreover, in Anti-Bribery, Anti-Corruption, and Competition Law (Antimonopoly Act) Guidelines for Business Partners, we strongly urge our business partners to understand Epson’s values and to eliminate any and all forms of corruption, including but not limited to involvement in bribery, cartels, insider trading, and conflict of interest. We insist that they conduct all transactions in accordance with these principles, promoting fair and open competition in the marketplace.

Epson Group Supplier Guidelines stipulates that Epson conducts business in a way that does not depend on entertainment or the like from suppliers. We ask our business partners to promptly report violations or potential violations by Epson personnel to Epson Group companies.

Anti-Corruption Activities

We see anti-corruption activities at Epson as an important part of risk management. A compliance control department works with corporate supervisory departments to monitor and control entertainment and gift-giving, invitations, donations, sponsorships, agency management, hiring, and much more.

Topic Description
Response to risks Corruption risks are evaluated based on the likelihood of corruption (per the Corruption Perceptions Index (CPI)) in countries and territories around the world and at Epson’s overseas subsidiaries, as well as on the impact that an incident of corruption would have. For high-risk organizations, we formulate and execute control plans every year, check plan progress quarterly, evaluate action effectiveness, and report the findings to the board of directors.
Business partners

We inform our business partners of the Anti-Bribery, Anti-Corruption, and Competition Law (Antimonopoly Act) Guidelines for Business Partners and the Epson Group Supplier Guidelines, and we ask them to forbid all manner of corruption, including but not limited to involvement in bribery, collusion, and conflict of interest.

In addition to informing our dealers, distributors, and service partners of the guidelines, we ask them to include compliance clauses in their business agreements whenever possible. Moreover, we are moving to check the state of compliance at our business partners.

We require all our business partners to comply with the guidelines, and we ask them to sign contracts or agreements to do so.
In addition, when evaluating potential new business partners, we check their system for managing compliance with anti-bribery and competition laws. For major suppliers, we conduct an annual detailed CSR evaluation to assess compliance with the Epson Supplier Code of Conduct (RBA Code of Conduct) and to ascertain what they are doing to prevent anti-competitive behavior and misconduct, including bribery. Among other things, we check whether they have established policies and rules, whether they have had violations, and, if so, what corrective actions were taken. If corrective action is necessary, we ask them to formulate corrective action plans and we monitor progress until the plans are completed.

Entertainment and gift-giving Illegal and unethical gifts and entertainment are prohibited, and prior approval is required for gifts and entertainment. Advance requests are submitted, examined, and checked to determine whether gifts and entertainment are acceptable.
Education We formulate annual compliance education plans and require officers and employees to complete an online course during October of each year, which we have designated as Compliance Month, to share information about cases of bribery and corruption.
We also periodically provide anti-bribery and anti-corruption education to our people in procurement, sales, development, and design, as these organizations are at higher risk of bribery and corruption.
Response to incidents If a violation that has a material impact on Group management should occur, the Crisis Management Committee will be called upon to invoke the crisis management program.
In the 2022 fiscal year, Epson did not incur any corruption-related penalties or fines that would require disclosure.

International Trade Control Initiatives

Epson is a multinational corporation with production centers, sales centers, customers, and business partners around the world. Smooth international trade operations are essential for delivering Epson products and services to customers in a timely manner.

Meanwhile, we must observe own regulations of each country to respond the changes in international situation as well as numerous conventions and frameworks governing international trade that have been put in place to maintain international peace and security.

To maintain compliance with these and to ensure smooth trade, Epson has established comprehensive systems for reliable trade management for entire EPSON Group. As a result, EPSON Group companies have many certifications around the world as companies that complies with the systems and programs established by the authorities of each county in Japan, North America, Latin America, Europe, China, Asia, etc., especially in areas of security trade control and security management that strict operations are required.
These contribute to an efficient and speedy supply chain for the entire group, such as simplification of import/export procedures and cost reduction.

Tax Compliance Policy

Epson seeks to fulfill its corporate social responsibility by paying appropriate taxes in compliance with the spirit as well as the letter of the tax laws and regulations in the countries and regions where it operates. In accordance with this basic policy on taxes, we are taking the actions below to maintain and improve tax compliance.

  1. Tax governance
    • The Board of Directors is responsible for overseeing tax risk, and Epson's Chief Financial Officer is the responsible official of Group tax affairs. The group that is in charge of tax affairs reports and manages taxes is under the supervision of the Chief Financial Officer.
    • Epson considers tax risk to be an important risk, and regularly reports such risks to the board of directors and the Corporate Management Council, which is composed of directors of the company.
    • Employees are trained in the tax-related regulations and business process standards that Epson has established to ensure that it properly fulfills its tax obligations. We conduct periodic internal tax audits and report the findings to top management and to the Audit & Supervisory Committee.
  2. Monitoring tax affairs
    • We appropriately respond in a timely manner to changes in local tax systems and taxation trends through regular reporting among the group that is in charge of tax affairs and Epson's local subsidiaries.
    • We enlist the support of tax accounting firms and other external experts for advice on taxes and for tax support in each country and region.
  3. Tax planning and Tax avoidance
    • Around the globe, we strive to effectively use preferential taxation systems where possible in our normal business activities to ensure a suitable tax burden.
    • We do not transfer value created to low tax jurisdictions, and do not use tax structures intended for tax avoidance without the spirit of the law.
  4. Dealing with uncertainty
    • Tax risk uncertainty is expected to increase as countries and regions around the globe strengthen their tax reporting obligations, tax audits, and tax enforcement. Epson controls tax risks by identifying situations that could potentially pose serious tax risks.
  5. Transfer pricing taxation
    • Epson complies with local tax laws and OECD guidelines to control transfer pricing tax risks. We have established transfer pricing guidelines for the Epson Group to help ensure appropriate transfer pricing transactions. In line with these transfer pricing guidelines, we control the profitability range of our global subsidiaries to ensure that transactions are made at arm's length.
    • We use an advance pricing arrangement (APA) for transactions with subsidiaries in high-risk countries.
  6. Anti-tax haven rules (also known as Japanese Controlled Foreign Company rules, or "CFC")
    • Epson sets up foreign subsidiaries to carry out its ordinary business activities, but does not do so in "tax haven" jurisdictions to avoid taxes. When anti-tax haven rules apply, Epson properly files and pays taxes.
  7. Relationships with tax authorities
    • Epson strives to work in good faith with tax authorities and to maintain and improve good tax corporate governance.