GOVERNANCE OVERSIGHT

Exxaro is committed to complying with the code of corporate practices and conduct set out King IV^TM. In terms of King IV^TM, Exxaro is responsible for risk management governance, including TRM.

Our board and audit committee manage tax risks. Operationally, the group tax manager is accountable for this function, reporting directly to the group finance director.

The corporate tax function is organisationally and physically separate from the finance function and is centralised at Exxaro's head office.
It is not responsible for tax compliance, control and management of indirect taxes such as VAT and PAYE, but advises when required.

The group tax manager reviews tax implications of projects presented to the investment review committee and executive management committee to keep the tax function informed of transactions at inception stage, particularly decisions with significant impact. This ensures effective tax planning and TRM for operational cost savings.

Policies and controls

The board approved the TRM framework in 2017. Significant changes are reported as required and the framework is regularly updated. It was last updated in 2019 and submitted to the board in March 2020. No significant amendments were made other than organisational reporting lines disclosed in the prior year.

The group tax manager is responsible for implementing and monitoring compliance with controls and procedures prescribed by the framework as well as identifying, analysing and evaluating the impact of events and associated risks on the group's strategic objectives.

Our board, audit committee, executive management, and other internal and external stakeholders are kept informed about TRM activities. Stakeholder expectations and requirements, as well as Exxaro's open and transparent reporting objective, drive risk reporting.

	The group tax manager provides quarterly reports to the audit committee on:
			Status of compliance with income tax filing to local and offshore tax authorities
			Status of significant tax disputes, audits and inquiries by authorities
			Significant tax developments affecting the business
			Significant tax risks identified (graded as likely to occur, with a tax impact above R10 million, where controls are inadequate to mitigate identified risks)
			The tax effect of material transactions such as acquisitions and disposals of assets, investments and businesses

Exxaro maintains transfer pricing policies for offshore transactions with connected parties. Our tax function upholds group document retention policies and uses the SARS e-filing system as an additional document database.

Assurance

We conduct internal and external assurance of TRM on an ad hoc or rotational basis for objective, independent appraisal of the framework and processes.

Our internal auditors reported no audit findings when evaluating the tax return and reporting pack during the year.

Performance management

	Exxaro undertakes the following performance management initiatives:
			The group tax manager consults Exxaro’s recruitment policies to ensure employees are qualified with the necessary skills and experience for each tax function role and its responsibilities.
			Exxaro also financially supports training and formal postgraduate studies. Employees regularly attend courses and seminars.
			Formal development programmes are in place for all tax staff.
			Personal performance appraisals assess employees’ commitment to risk management.
			Bonus and share option schemes retain tax function employees with rewards for excellent performance. Non-performance is addressed by Exxaro’s group human resources business unit.