Tax Strategy

TSC SP. Z O.O. – INFORMATION ON THE IMPLEMENTED TAX STRATEGY FOR THE TAX YEAR FROM JANUARY 1, 2022 TO DECEMBER 31, 2022.

This Information on the Implemented Tax Strategy constitutes the fulfilment of the obligation imposed on certain corporate income taxpayers since 2021, pursuant to Article 27c of the Act of February 15, 1992 on Corporate Income Tax (consolidated text: Journal of Laws of 2021, item 1800, as amended; hereinafter referred to as the ‘CIT Act’).

A. INFORMATION ABOUT TSC SP. Z O.O. AND THE MAIN ASSUMPTIONS OF THE TAX STRATEGY FOR THE COMPANY’S TAX YEAR FROM JANUARY 1, 2022 TO DECEMBER 31, 2022

1. TSC operates in three key areas: (i) chemicals for the paper industry, (ii) recycling, and (iii) the production of paper products and the sale of selected paper grades. The company applies the latest product and technological solutions in its operations.
2. One of the most important objectives of TSC — both currently and throughout the tax year from January 1, 2022 to December 31, 2022 — is to treat tax matters as an integral part of corporate responsibility. The completeness and accuracy of TSC’s tax settlements are among the key indicators of its reliability and integrity. TSC’s activities are carried out with due diligence by highly qualified personnel who uphold strong ethical values.
3. The internal structure of TSC has been organised to support the achievement of operational objectives, rather than tax optimisation.
4. Since 2015, the Company has been subject to audits concerning its recycling processes. These audits are conducted within the framework of the European Eco-Management and Audit Scheme (EMAS) and by Province Marshal’s Offices. The results of the audits clearly confirm the reliability of the environmental documentation maintained by the Company.
5. TSC has received numerous awards and distinctions. The Company has repeatedly been recognised as an international leader in chemical services for the chemical industry. TSC is among the winners of the Forbes Diamonds 2022 and has also received a Diamond to the Golden Statuette in the 30^th edition of the Polish Business Leader competition. The Company was additionally recognized as a Gazela Biznesu 2022. Corporate Social Responsibility (CSR) is of key importance to TSC. The Company is guided by this principle, which forms an integral part of its management strategy. Environmental and social aspects are particularly significant to TSC. The Company is actively involved in supporting local programmes and organisations for children and youth. In particular, it supports the Make a Change Foundation through the programme ‘Follow Your Dreams and Make a Change.’ This programme gives young people the opportunity to gain valuable extracurricular experiences and soft skills that will benefit their future development. Additionally, the Company has sponsored awards for winners of the ‘Young County Ecology Leader’ competition. TSC also collaborates with and supports the activities of the Association of Fire Brigades of the Mazowieckie province. The Company actively cooperates with the Museum of Warsaw Foundation by supporting the Museum’s educational programmes and acquiring works for its contemporary art collection. For many years, TSC has strived to support social initiatives. The Company understands its role as a member of the community in which it operates and is eager to support activities related to corporate social responsibility. Paying taxes in accordance with both the letter and the spirit of the law — in the correct amount and within the appropriate deadlines — is viewed by TSC as a way of returning part of its profit to the society in which it operates, from which it earns its income and whose resources it uses. An essential part of TSC’s strategy is also to build well-founded trust between the Company and the National Revenue Administration.
6. TSC strives for full compliance with all statutory obligations, international standards, and for full disclosure of information relevant from a tax perspective to the appropriate tax authorities. TSC’s tax matters are managed in a way that takes into account not only financial outcomes but also the Company’s reputation, in accordance with its overall high standards of corporate governance and ethical values. Furthermore, TSC is committed to adhering to internal tax regulations and procedures, which impose additional responsibilities in this regard.
7. TSC’s tax settlements are carried out in accordance with the applicable tax and accounting regulations. The amounts of tax liabilities are calculated based on relevant legal provisions and reflect the actual course of economic events. Taxes are paid within the deadlines specified by law.
8. TSC has not engaged in artificial arrangements aimed at reducing its actual tax burden and does not participate in, nor will it participate in, artificial tax structures that lack economic justification. All decisions are made primarily based on economic and business considerations, rather than for tax reasons.
9. TSC does not create structures involving entities based in countries that engage in harmful tax competition — so-called tax havens — and, within the scope of its operational activities, limits cooperation with entities from such jurisdictions.
10. Legally regulated tax instruments, such as individual tax rulings and binding rate and tariff information (WIS, WIT), are used by TSC for the purpose of interpreting tax law, not for tax optimisation.
11. In the course of its operations, TSC strives to make use of available tax incentives, reliefs, and exemptions in accordance with tax regulations and in the spirit in which they were introduced. The Company plans to take advantage of tax exemptions in the coming years by commencing operations within the Polish Investment Zone.

B. IMPLEMENTATION OF THE TAX STRATEGY IN THE TAX YEAR FROM JANUARY 1, 2022 TO DECEMBER 31, 2022

In fulfilling its statutory obligation, TSC presents the following information regarding the implementation of its tax strategy for the tax year from January 1, 2022 to December 31, 2022:

1. Information on the processes and procedures applied by TSC for managing the performance of obligations arising from tax regulations and ensuring their correct execution:

The proper fulfilment of tax obligations is a matter of significant importance to TSC, as it reflects the Company’s reliability and integrity. The identification of tax risk and its sources is one of the key elements in TSC’s operations.

The Company follows an established practice that includes a range of mechanisms aimed at ensuring the correctness of its tax settlements and minimising potential tax risks.

TSC has an Accounting Department composed of qualified personnel who ensure the proper fulfilment of the Company’s tax obligations. The employees of the Accounting Department inform TSC’s management about any changes in tax regulations and raise awareness of the tax risks associated with such changes. The Company strives to implement all new tax regulations within the organisation in a timely manner.

In cases where doubts arise regarding its tax settlements, TSC, when necessary, seeks support from an external entity authorized to provide tax advisory services.

In the course of its business operations, the Company applies various mechanisms and procedures, both documented and undocumented. Particularly important for TSC’s activities are the established and implemented processes related to fulfilling obligations under tax law. Among others, the Company has implemented and applies an internal procedure for the approval and description of cost documents, as well as an internal procedure aimed at preventing non-compliance with the obligation to report tax schemes (MDR).

The Company plans to formalise the most important mechanisms currently in place for fulfilling its tax obligations. A documented system of procedures will form an integral part of its corporate governance framework.

1. Information on voluntary forms of cooperation with the authorities of the National Revenue Administration:
   In the tax year from January 1, 2022 to December 31, 2022, TSC did not engage in any voluntary forms of cooperation with the authorities of the National Revenue Administration.
2. Information regarding TSC’s fulfilment of tax obligations within the territory of the Republic of Poland, including the number of tax scheme disclosures submitted to the Head of the National Revenue Administration, as referred to in Article 86a § 1 point 10 of the Tax Ordinance, broken down by the types of taxes involved:

a) Fulfilment of tax obligations in the area of income taxes and local taxes: The Company strives to ensure that its actions related to the fulfilment of tax obligations are consistent with TSC’s values and its overall business strategy. As both a taxpayer and a tax remitter, TSC undertakes its interactions with tax authorities in a diligent and honest manner.

TSC submits all required tax returns and information on time and settles its tax liabilities in accordance with the applicable deadlines.

b) Information on Tax Schemes
In the tax year from January 1, 2022 to December 31, 2022, the Company did not identify any tax schemes and therefore did not submit any information on tax schemes to the Head of the National Revenue Administration, as referred to in Article 86a Section 1 point 10 of the Tax Ordinance.

1. Information on transactions with related entities, as defined in Article 11a(1)(4) of the CIT Act, whose value exceeds 5% of the balance sheet total of assets as defined by accounting regulations, based on the Company’s most recently approved financial statements, including entities that are not tax residents of the Republic of Poland:

In the tax year from January 1, 2022 to December 31, 2022, the Company conducted transactions with related entities whose value exceeded 5% of the balance sheet total of assets as defined by accounting regulations, based on the Company’s most recently approved financial statements, i.e. the value exceeded PLN 4,622,684.84.

In the tax year from January 1, 2022 to December 31, 2022, the Company entered into the following transactions that meet the above criterion:
a) sales transactions of goods to TSC Ukraine (an entity related through capital ties) – total transaction value: PLN 12,696,968.75;
b) sales transactions of goods to TSC International (an entity related through personal ties) – total transaction value: PLN 31,180,054.48;
c) sales transactions of goods and services to LT PACK Sp. z o.o. (an entity related through capital ties) – total transaction value: PLN 35,488,469.47.
The Company did not enter into transactions with related entities on terms other than arm’s length.

1. Information on restructuring activities planned or undertaken by TSC that may affect the amount of tax liabilities of the taxpayer or related entities, as defined in Article 11a(1)(4) of the CIT Act:
   In the tax year from January 1, 2022 to December 31, 2022, the Company did not undertake or plan any restructuring activities.
2. Information on applications submitted by TSC for the issuance of a general tax ruling, an individual interpretation of tax law provisions, a binding rate information (WIS), or a binding excise information (WIA):

In the tax year from January 1, 2022 to December 31, 2022, the Company did not submit any applications for the issuance of a general tax ruling, an individual interpretation of tax law provisions, a binding rate information, or a binding excise information.

1. Information regarding TSC’s tax settlements in territories or countries applying harmful tax competition, as specified in the executive acts issued pursuant to Article 11j(2) and Article 23v(2) of the Personal Income Tax Act of July 26, 1991, as well as in the announcement of the minister responsible for public finance issued pursuant to Article 86a Section 10 of the Tax Ordinance:

In the tax year from January 1, 2022 to December 31, 2022, the Company did not conduct any tax settlements in territories or countries applying harmful tax competition.

TSC SP. Z O.O. – INFORMATION ON THE IMPLEMENTED TAX STRATEGY FOR THE TAX YEAR FROM JANUARY 1, 2021 TO DECEMBER 31, 2021.

This Information on the Implemented Tax Strategy constitutes the fulfilment of the obligation imposed on certain corporate income taxpayers since 2021, pursuant to Article 27c of the Act of February 15, 1992 on Corporate Income Tax (consolidated text: Journal of Laws of 2021, item 1800, as amended; hereinafter referred to as the ‘CIT Act’).

A. INFORMATION ABOUT TSC SP. Z O.O. AND THE MAIN ASSUMPTIONS OF THE TAX STRATEGY FOR THE COMPANY’S TAX YEAR FROM JANUARY 1, 2021 TO DECEMBER 31, 2021

1. TSC operates in three key areas: (i) chemicals for the paper industry, (ii) recycling, and (iii) the production of paper products and the sale of selected paper grades. The company applies the latest product and technological solutions in its operations.
2. One of the most important objectives of TSC — both currently and throughout the tax year from January 1, 2021 to December 31, 2021 — is to treat tax matters as an integral part of corporate responsibility. The completeness and accuracy of TSC’s tax settlements are among the key indicators of its reliability and integrity. TSC’s activities are carried out with due diligence by highly qualified personnel who uphold strong ethical values.
3. The internal structure of TSC has been organised to support the achievement of operational objectives, rather than tax optimisation.
4. Since 2015, the Company has been subject to audits concerning its recycling processes. These audits are conducted within the framework of the European Eco-Management and Audit Scheme (EMAS) and by Province Marshal’s Offices. The results of the audits clearly confirm the reliability of the environmental documentation maintained by the Company.
5. TSC has received numerous awards and distinctions. The Company has repeatedly been recognised as an international leader in chemical services for the chemical industry. TSC is among the winners of the Forbes Diamonds 2022 and has also received a Diamond to the Golden Statuette in the 30^th edition of the Polish Business Leader competition. The Company was additionally recognised as a Gazela Biznesu 2019.

Corporate Social Responsibility (CSR) is of key importance to TSC. The Company is guided by this principle, which forms an integral part of its management strategy. Environmental and social aspects are particularly significant to TSC. The Company is actively involved in supporting local programmes and organisations for children and youth. In particular, it supports the Make a Change Foundation through the programme ‘Follow Your Dreams and Make a Change.’ This programme gives young people the opportunity to gain valuable extracurricular experiences and soft skills that will benefit their future development. Additionally, the Company has sponsored awards for winners of the ‘Young County Ecology Leader’ competition.

Paying taxes in accordance with both the letter and the spirit of the law — in the correct amount and within the appropriate deadlines — is viewed by TSC as a way of returning part of its profit to the society in which it operates, from which it earns its income and whose resources it uses. An essential part of TSC’s strategy is also to build well-founded trust between the Company and the National Revenue Administration.

1. TSC strives for full compliance with all statutory obligations, international standards, and for full disclosure of information relevant from a tax perspective to the appropriate tax authorities. TSC’s tax matters are managed in a way that takes into account not only financial outcomes but also the Company’s reputation, in accordance with its overall high standards of corporate governance and ethical values. Furthermore, TSC is committed to adhering to internal tax regulations and procedures, which impose additional responsibilities in this regard.
2. TSC’s tax settlements are carried out in accordance with the applicable tax and accounting regulations. The amounts of tax liabilities are calculated based on relevant legal provisions and reflect the actual course of economic events. Taxes are paid within the deadlines specified by law.
3. TSC has not engaged in artificial arrangements aimed at reducing its actual tax burden and does not participate in, nor will it participate in, artificial tax structures that lack economic justification. All decisions are made primarily based on economic and business considerations, rather than for tax reasons.
4. TSC does not create structures involving entities based in countries that engage in harmful tax competition — so-called tax havens — and, within the scope of its operational activities, limits cooperation with entities from such jurisdictions.
5. Legally regulated tax instruments, such as individual tax rulings and binding rate and tariff information (WIS, WIT), are used by TSC for the purpose of interpreting tax law, not for tax optimisation.
6. In the course of its operations, TSC strives to make use of available tax incentives, reliefs, and exemptions in accordance with tax regulations and in the spirit in which they were introduced. The Company plans to take advantage of tax exemptions in the coming years by commencing operations within the Polish Investment Zone.

B. IMPLEMENTATION OF THE TAX STRATEGY IN THE TAX YEAR FROM JANUARY 1, 2021 TO DECEMBER 31, 2021

In fulfilling its statutory obligation, TSC presents the following information regarding the implementation of its tax strategy for the tax year from January 1, 2021 to December 31, 2021:

1. Information on the processes and procedures applied by TSC for managing the performance of obligations arising from tax regulations and ensuring their correct execution:

The proper fulfilment of tax obligations is a matter of significant importance to TSC, as it reflects the Company’s reliability and integrity. The identification of tax risk and its sources is one of the key elements in TSC’s operations.

The Company follows an established practice that includes a range of mechanisms aimed at ensuring the correctness of its tax settlements and minimising potential tax risks.

TSC has an Accounting Department composed of qualified personnel who ensure the proper fulfilment of the Company’s tax obligations. The employees of the Accounting Department inform TSC’s management about any changes in tax regulations and raise awareness of the tax risks associated with such changes. The Company strives to implement all new tax regulations within the organisation in a timely manner.

In cases where doubts arise regarding its tax settlements, TSC, when necessary, seeks support from an external entity authorised to provide tax advisory services.

In the course of its business operations, the Company applies various mechanisms and procedures, both documented and undocumented. Particularly important for TSC’s activities are the established and implemented processes related to fulfilling obligations under tax law. Among others, the Company has implemented and applies an internal procedure for the approval and description of cost documents, as well as an internal procedure aimed at preventing non-compliance with the obligation to report tax schemes (MDR).

The Company plans to formalise the most important mechanisms currently in place for fulfilling its tax obligations. A documented system of procedures will form an integral part of its corporate governance framework.

1. Information on voluntary forms of cooperation with the authorities of the National Revenue Administration:
   In the tax year from January 1, 2021 to December 31, 2021, TSC did not engage in any voluntary forms of cooperation with the authorities of the National Revenue Administration.
2. Information regarding TSC’s fulfilment of tax obligations within the territory of the Republic of Poland, including the number of tax scheme disclosures submitted to the Head of the National Revenue Administration, as referred to in Article 86a Section 1 point 10 of the Tax Ordinance, broken down by the types of taxes involved:

a) Fulfilment of tax obligations in the area of income taxes and local taxes:

The Company strives to ensure that its actions related to the fulfilment of tax obligations are consistent with TSC’s values and its overall business strategy. As both a taxpayer and a tax remitter, TSC undertakes its interactions with tax authorities in a diligent and honest manner.

TSC submits all required tax returns and information on time and settles its tax liabilities in accordance with the applicable deadlines.

b) Information on Tax Schemes:
In the tax year from January 1, 2021 to December 31, 2021, the Company did not identify any tax schemes and therefore did not submit any information on tax schemes to the Head of the National Revenue Administration, as referred to in Article 86a Section 1 point 10 of the Tax Ordinance.

1. Information on transactions with related entities, as defined in Article 11a(1)(4) of the CIT Act, whose value exceeds 5% of the balance sheet total of assets as defined by accounting regulations, based on the Company’s most recently approved financial statements, including entities that are not tax residents of the Republic of Poland:

In the tax year from January 1, 2021 to December 31, 2021, the Company conducted transactions with related entities whose value exceeded 5% of the balance sheet total of assets as defined by accounting regulations, based on the Company’s most recently approved financial statements, i.e. the value exceeded PLN 3,993,592.20.

In the tax year from January 1, 2021 to December 31, 2021, the Company entered into the following transactions that meet the above criterion:

a) sales transactions of goods to TSC Ukraine (an entity related through capital ties) – total transaction value: PLN 8,846,512.22

b) sales transactions of goods to TSC International (an entity related through personal ties) – total transaction value: PLN 32,857,682.91;
c) sales transactions of goods and services to LT PACK Sp. z o.o. (an entity related through capital ties) – total transaction value: PLN 26,411,497197.
The Company did not enter into transactions with related entities on terms other than arm’s length.

1. Information on restructuring activities planned or undertaken by TSC that may affect the amount of tax liabilities of the taxpayer or related entities, as defined in Article 11a(1)(4) of the CIT Act:
   In the tax year from January 1, 2021 to December 31, 2021, the Company did not undertake or plan any restructuring activities.
2. Information on applications submitted by TSC for the issuance of a general tax ruling, an individual interpretation of tax law provisions, a binding rate information (WIS), or a binding excise information (WIA):

In the tax year from January 1, 2021 to December 31, 2021, the Company did not submit any applications for the issuance of a general tax ruling, an individual interpretation of tax law provisions, a binding rate information, or a binding excise information.

1. Information regarding TSC’s tax settlements in territories or countries applying harmful tax competition, as specified in the executive acts issued pursuant to Article 11j(2) and Article 23v(2) of the Personal Income Tax Act of July 26, 1991, as well as in the announcement of the minister responsible for public finance issued pursuant to Article 86a Section 10 of the Tax Ordinance:

In the tax year from January 1, 2021 to December 31, 2021, the Company did not conduct any tax settlements in territories or countries applying harmful tax competition.