COSL

UK tax Strategy

As part of a large group, the Company is required to comply with HMRC’s legislation to publish its approach to tax management.  This publication is considered as complying with the duty under Schedule 19, Finance Act 2016, paragraph 22(2).

COSL`s overall tax strategy aims to support its business by maintaining an appropriate tax rate, while mitigating tax risks and complying with the rules and regulations of the jurisdictions in which COSL operates. COSL seeks to balance its responsibilities for controlling tax costs with its responsibilities to pay tax where it does business.

This strategy applies for the 2018 financial year.

Listed below are additional elements of COSL`s tax strategy affecting UK taxation.

 

Risk management and Governance

COSL`s board of directors provides oversight of COSL`s risk management process. The board executes its risk oversight function both in its own right and through delegation to its key committees.

While the board and its committees oversee risk management, management of COSL`s operations in the UK is charged with day-to-day management of UK tax risk. COSL maintains internal policies and procedures to support its tax control framework and provides training to its personnel to manage UK tax risk.

COSL`s CFO manages the global tax risk for COSL.  The CFO for COSL Drilling Europe AS, manages the tax risk for UK and Europe. The tax department at head office in Beijing work together with the local management to identify and manage UK tax risks using its knowledge of COSL`s operations and UK tax legislation. They do this by, for example, (i) regularly communicating with finance staff to keep informed of any significant business changes, (ii) monitoring proposed changes in UK tax legislation to identify its potential impact on COSL and (iii) being involved in all acquisitions, including preparing or reviewing tax diligence reports.

Tax planning

COSL engage in appropriate tax planning that supports its business and reflects commercial and economic activity. COSL does not engage in aggressive tax arrangements, the sole purpose if which would be to obtain a tax advantage. COSL does, however, have a responsibility to minimise its tax risk and potential damage to its reputation and brand.

COSL believes it is important to plan its business operations so that COSL complies with UK and foreign tax obligations. COSL consider the tax consequences of significant transactions before carrying them out and its tax department decides when to consult external advisors on the tax implications of a potential transaction, with the depth of such advice being driven by the assessment of risk presented by each transaction.

Level of acceptable Tax Risk

COSL`s tax arrangements are based on its commercial business and economic activities. COSL recognizes that there is inherent risk related to taxation due to (i) the complexity of taxes, (ii) the scope of disagreement over the interpretation of laws meaning that tax authorities may tax a different view of the application of legislation and (iii) the variety and volume of different taxes that affect COSL`s activities. COSL monitors and reviews its operations in the UK regularly to to be compliant with the tax rules and regulations.

Relationship with Her Majesty’s Revenue & Customs (HMRC)

COSL is committed to the principles of openness and transparency with tax authorities and adopts a proactive approach to raising tax issues and working collaboratively with local tax authorities wherever possible.

COSL seeks to build and sustain a relationship with local tax authorities that are constructive and based on the principles of cooperation, honesty and compliance.

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