Values

PTT is committed to being an organization that fosters economic growth, enhances the country's competitive capability, develops society, and improves the quality of life. It aims to innovate and apply technology in all sectors, including being a driving force for the lifestyle of people, society, communities, and the environment, to advance through changes. Under the vision "Powering Life with Future Energy and Beyond," the PTT Group shares core values known as "SPIRIT," which serve as a steadfast principle for executives and employees. These include “Synergy to create partnerships, Performance Excellence for outstanding achievements, Innovation for growth through innovation, Responsibility for Society to foster society and the environment, Integrity and Ethics to build goodness, and Trust & Respect to build confidence and trust. Key components of Integrity and Ethics involve transparency, compliance with laws, and governance, which are applied in PTT Group's operations, both domestically and internationally.

Additionally, PTT adheres to the core values of the United Nations Global Compact (UNGC) regarding human rights, labor standards, the environment, and anti-corruption. It supports the principles of the Extractive Industries Transparency Initiative (EITI), which establishes global standards to promote the disclosure and accountability of extractive industries. Through EITI, it aims to enhance the sustainability and transparency standards for the industry, responding to the needs of stakeholders across all sectors.

Tax Strategies for Sustainability^{GRI 207-1, GRI 207-2}

With an unwavering dedication to sustainability and excellence, guided by principles of good corporate governance, PTT has upheld its position as a member of  DJSI World index. PTT proudly stands as the inaugural Thai company to join the Oil & Gas Upstream & Integrated (OGX) sector in 2012.

The DJSI's evaluation criteria place a spotlight on the efficacy and triumph of business endeavors, particularly in realms pertinent to economic advancement, societal progress, and environmental stewardship. Notably, one pivotal criterion revolves around tax strategy, wherein DJSI's scrutiny emphasizes the public disclosure of tax policies, income transparency, operational profit, tax reporting, and the management of tax-related risks. Since 2014, PTT has consistently garnered perfect scores and successive Industry Best accolades from DJSI assessments, maintaining a substantial lead over both industry and DJSI World averages.

The taxes paid by the PTT Group in various countries worldwide underscore its significant role in bolstering public finances within these nations. PTT's voluntary disclosure of tax-related information to DJSI showcases its unwavering dedication to upholding transparency in tax payments across diverse jurisdictions. This commitment resonates with PTT's endorsement of the Extractive Industries Transparency Initiative (EITI) principles. Furthermore, PTT's steadfast commitment to sustainable development and exemplary governance underscores its resolve to enhance transparency in tax payments to governments. PTT remains steadfast in its mission to promote transparency in tax matters and continues to spearhead the development of transparency practices.

Tax Governance Structure and Policy

Tax Policy

To support the overall business strategy and values, PTT has established tax policies based on transparency and long-term sustainability. These tax policies are endorsed by the core values of the Company, encapsulated in "SPIRIT," particularly emphasizing Responsibility for Society, Integrity and Ethics, and Trust & Respect. These principles are ingrained at every level of the organization and are implemented under the PTT Group Way of Conduct to ensure consistency in tax practices, promote good governance, and sustain the Company's integrity within the PTT Group.

Since 2014, PTT has implemented the PTT Group Way of Conduct across the entire Group. The Group's tax policy consists of 13 principles aimed at fostering alignment concerning tax governance throughout the Group. PTT is committed to conducting business in accordance with the spirit of the law, regulations, and relevant rules in all areas where the PTT Group operates, both domestically and internationally. PTT firmly believes in paying taxes fairly and is confident that income tax will yield long-term benefits for the organizational values. Implementing tax policies is the first step towards greater transparency and enhanced governance.

Since 2014, PTT has implemented the PTT Group Way of Conduct across the entire Group. The Group's tax policy consists of 13 principles aimed at fostering alignment concerning tax governance throughout the Group. PTT is committed to conducting business in accordance with the spirit of the law, regulations, and relevant rules in all areas where the PTT Group operates, both domestically and internationally. PTT firmly believes in paying taxes fairly and is confident that income tax will yield long-term benefits for the organizational values. Implementing tax policies is the first step towards greater transparency and enhanced governance.

PTT Group Global Tax Policy Guidelines^{GRI 207-2}

The tax risk management framework within the PTT Group is structured into three tiers:

1. At the apex is the "PTT Group Way of Conduct - Tax Policy," delineating fundamental principles that govern the overarching tax management strategy adopted by the PTT Group.

2. In the intermediate tier, we have the "Global Tax Policy Guidelines," offering comprehensive policy directives to ensure compliance and effective execution of tax policies. These guidelines also furnish strategies for managing tax risks across diverse tax categories, including:

• Tax compliance
• Tax advisory and planning
• Transfer pricing
• Tax audit
• Tax risk management
• External tax advisor

3. At the lowest tier, "Operating Procedures" involve operational processes and steps designed to implement principles from the uppermost and middle tiers effectively.

Tax Risk Management Framework

The Global Tax Policy Guidelines encompass six key areas to support the implementation of tax policies related to various tax matters, as follows:

1. Tax Compliance - Establishing practices to ensure that the PTT Group complies with tax laws by filing taxes accurately and on time. This involves exercising professional judgment, managing risks, and complying with laws, accompanied by the preparation of relevant documentation.
2. Tax Advisory and Planning - Defining practices to consider tax implications for investment projects or new transactions, aligning tax planning with business strategies and trade, and identifying, assessing, reporting, and managing tax risks.
3. Transfer Pricing - Implementing practices to ensure that transactions between related parties adhere to the Arm's Length principle and preparing transfer pricing documentation to support the chosen transfer pricing method.
4. Tax Audit - Setting forth guidelines for ensuring that tax audits and interactions with tax authorities are managed consistently, demonstrating the group's dedication to transparency and mutual respect, and acting professionally to foster effective collaboration, attentive listening, and insightful issue summarization for the PTT Group.
5. Tax Risk Management - Establishing practices to ensure that tax responsible parties or business units involved in tax-impacting transactions understand appropriate methods for identifying, assessing, reporting, and managing tax risks accurately.
6. External Tax Advisor - Defining practices for engaging external tax advisors as needed to ensure that advice from external advisors meets high standards.
   
   

Tax Structuring Guidelines^{GRI 207-1}

The PTT Group is acutely aware that profits should be taxed in the countries where the economic activities generating those profits take place, and it remains steadfast in its commitment to fair tax payment in those jurisdictions. Consequently, the PTT Group firmly opposes the transfer of profits to jurisdictions with minimal or no taxation or with low tax rates. The Group is cognizant of both the direct and indirect risks stemming from improper tax planning and rejects the utilization of opaque or legally questionable tax arrangements aimed at tax avoidance, which could erode the substance of business operations. Furthermore, the management and the Board of PTT unequivocally disapprove of employing non-transparent or legally dubious tax structures in the Group's tax strategies.

In the course of conducting business, the PTT Group carefully weighs numerous factors and impacts to strike a balance among business perspectives, costs (inclusive of taxes), regulatory requirements, and investor considerations, ensuring that the PTT Group complies with requirements related to its specific status, namely being a publicly listed company on the Stock Exchange of Thailand, the national energy company, and a state enterprise.

Given the scale, geographical spread, and intricacies of global energy operations, coupled with the intricate tax regimes in each jurisdiction where the PTT Group operates, there exist compelling business justifications and suitability considerations (such as regulatory environments and structures derived from prior acquisitions and proximity to clientele) that prompt the Group's international subsidiaries, often established in countries with stable governance and well-defined regulatory frameworks, and conceivably lower tax rates, to be established in countries with moderate tax systems when engaging in investment agreements with counterparts in other nations.

Given the scale, geographical spread, and intricacies of global energy operations, coupled with the intricate tax regimes in each jurisdiction where the PTT Group operates, there exist compelling business justifications and suitability considerations (such as regulatory environments and structures derived from prior acquisitions and proximity to clientele) that prompt the Group's international subsidiaries, often established in countries with stable governance and well-defined regulatory frameworks, and conceivably lower tax rates, to be established in countries with moderate tax systems when engaging in investment agreements with counterparts in other nations.

Cooperation in Tax Reporting

Presently, there has been a surge in the number of tax laws and regulations, placing a stronger emphasis on transparency requirements, especially concerning transfer pricing and the substance requirements for Ultimate Parent Entities. PTT stresses to all entities within the Group the imperative of pursuing precision to raise tax management transparency and good governance to the highest standard, concurrently fostering awareness throughout the PTT Group about both direct and indirect tax-related risks.

Since 2015, the PTT Group has proactively readied itself for the documentation demands of all three types of transfer pricing documentation: Master File, Local File, and Country-by-Country Report. These align with the new tax reporting standards established under the OECD/G20 Base Erosion and Profit Shifting Project (BEPS), furnishing details on profit allocation, business activities, and global taxes of multinational enterprises. The PTT Group has faithfully adhered to these tax reporting obligations, thereby amplifying the tax transparency of the Group on a global scale. Furthermore, since 2021, PTT has vigilantly monitored and geared up for compliance with new international tax initiatives, notably BEPS 2.0 Pillar 1 and Pillar 2. This preparedness has bolstered the Group's readiness and enhanced tax transparency.

Revenue Transparency 2022^GRI207-4

Social Responsibility^{GRI 207-3}

The PTT Group acknowledges the significance of tax revenue derived from its business operations, understanding its role in bolstering infrastructure and community welfare programs within the countries it operates. However, taxation represents just one facet of the comprehensive economic and social support extended by the Group to communities, transcending mere fiscal contributions to governments. This underscores PTT's dedication to voluntary societal contribution, encompassing both economic and social spheres.

In tandem with its annual Corporate Social Responsibility (CSR) endeavors targeting social welfare, community development, and environmental stewardship, the Group has embraced the philosophy of Creating Shared Value (CSV) in its business. This approach is geared towards enriching society, fostering community well-being, and safeguarding the environment. PTT places a premium on sustainability, viewing education as the cornerstone of national human capital advancement. This conviction has culminated in the establishment of the Vidyasirimedhi Institute, a cutting-edge research-focused educational institution, and Kamnoetvidya Science Academy, a specialized senior high school in science and mathematics, aimed at nurturing gifted students into future scientific leaders.

Furthermore, the PTT Group upholds a commitment to tax transparency and robust tax governance, recognizing their pivotal roles in fostering sustainable growth for all stakeholders. Consequently, the Group remains steadfast in its efforts to uphold and enhance tax reporting procedures and transparency standards throughout the organization.