1. Introduction

1.1 Background

This document sets out the tax strategy and strategic tax objectives for the UK branch of UnionPay International Co. Ltd (“UnionPay International”).

This strategy has also been developed in compliance with Schedule 19 of the UK Finance Act 2016, which requires large groups to publish their UK Tax Strategy, and applies to the year ended 31 December 2023.

1.2 Scope

The tax strategy and the strategic objectives set out in this document are tailored towards establishing a clear approach to the various aspects of tax reporting and compliance for the UK operations of UnionPay International. References to “tax” in this document encompass the following taxes in the UK: corporate tax, income tax, indirect tax, and employment tax.

1.3 Ownership and audience

This strategy is owned by Senior Management at UnionPay International and will be reviewed and approved by the Board of Directors (“BoD”) of UnionPay International. This strategy is applicable to various stakeholders including the BoD, all finance personnel, and in particular, any professionals employed by UnionPay International, who have responsibilities in relation to tax in the UK.

2. Business Strategy

2.1 Group overview

UnionPay International (UPI) is a subsidiary of China UnionPay focused on the growth and support of UnionPay's global business. In partnership with more than 2500 institutions worldwide, UnionPay International has enabled card acceptance in 181 countries and regions with issuance in 79 countries and regions. UnionPay International provides high quality, cost effective and secure cross-border payment services to the world's largest cardholder base and ensures convenient local services to a growing number of global UnionPay cardholders and merchants.

3. UK Tax Strategy

3.1 UK Tax Strategy statement

1. Tax governance and risk management

The UK management team are responsible for monitoring the day to day operation of tax, for the UK branch. The senior management have ultimate responsibility and will provide oversight to the UK team with the UK team reporting regularly into Senior Management. If risks are identified, the UK team will communicate to Senior Management to discuss the risk, the impact and the potential solutions. External advisors are consulted on a regular basis to manage tax risks and ensure we are compliant with our UK tax obligations. If any significant issues are identified by the UK management team, formal processes and controls are in place to report this to the UnionPay International Board of Directors e.g. tax compliance and tax risks.

2. Attitude towards tax planning and approach to tax

UnionPay International UK branch’s approach to tax and tax planning is carefully aligned to our strategic and corporate objectives and compliance is core to what we do. We aim to comply with all applicable tax laws and regulations, however we will undertake legitimate tax incentives, exemptions and reliefs, if applicable, which are offered by the UK Government to all taxpayers.

We will consider the most tax efficient way to undertake business transactions however transactions will be underpinned by commercial activities and objectives. We will not enter into wholly artificial arrangements. All transactions will follow the arm’s length principles in line with our Transfer Pricing policies and OECD guidelines.

3. Tax Risk

We have a low tolerance towards tax risk and we proactively engage with advisors to achieve certainty on our tax position which is aligned to our overall approach to risk.

4. Relationship with HMRC

We aim to be open and transparent in all our dealings with HMRC and we maintain a proactive relationship, encouraging open dialogue on a timely basis, and seek clearances where necessary. Where any tax law is unclear or subject to interpretation, we will engage with external tax advisors to ensure we remain compliant in all operations. Where applicable we will work with HMRC to attempt to resolve any differences in a timely and professional manner.