Tax risk management

Framework

As stated in Exxaro's enterprise risk management (ERM) framework, in today's environment of change and uncertainty, effective risk management is a critical success factor for achieving our strategic and business objectives. Embedding risk management into existing processes is key to making informed decisions and proactively planning for possible future events stemming from internal as well as external sources. Effectively dealing with uncertainty and stakeholder expectations regarding our tax affairs requires strong focus on tax risk management (TRM).

TRM is important due to the development of operational risk management techniques, new regulatory requirements on transparency and disclosure, as well as a more restrictive mindset in tax planning and focus on good corporate governance.

TRM is a proactive, systematic analysis of possible unwanted events and responses (including controls and treatment plans) rather than a reactive mechanism to events detected. TRM form part of the group ERM and ensures the independence of the tax function in the group.

Philosophy and risk appetite

In Exxaro's ERM framework, we state that our vision is to create sustainable value for all stakeholders by striving for operational efficiency, continuous improvement and regulatory compliance within a framework of responsible citizenship.

In keeping with the group's risk management philosophy, business strategy and objectives, Exxaro tax function's TRM strategy is to create value, protect the group against loss, and ensure effective tax planning, compliance with tax legislation and appropriate financial reporting within acceptable risk parameters.

To this end, Exxaro will look at tax planning as a legitimate business lever within the parameters of tax legislation.