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UK Tax Strategy

This tax strategy is being published in satisfaction of the statutory obligation under Paragraph 16(2) and Schedule 19 of the Finance Act of 2016 for Red Hat (UK) Ltd. Red Hat, Inc. (“Red Hat”) is the ultimate parent of Red Hat (UK) Ltd. This document has been approved for publication by Red Hat’s Board of Directors.

About Red Hat

Red Hat, founded in 1993 and headquartered in the United States, is a leading provider of open source software solutions, using a community-powered approach to develop and offer reliable and high-performing operating system, virtualization, management, middleware, cloud, mobile and storage technologies.

Red Hat is based in Raleigh, North Carolina and is listed on the New York Stock Exchange under the ticker symbol RHT. Red Hat employs 11,000+ people operating in over 90 countries with reported revenues in excess of USD 2.4B for its last full fiscal year ending February 28, 2017.

Red Hat offers customers choice, consistency and meaningful value across our portfolio of software solutions. We have the advantage of years of experience working with open source communities to develop and offer technologies designed to address the evolving needs of our customers. We believe open source is the best way to develop software, and we apply the open source principles of transparency and accountability across our business, including the way in which we execute our tax strategy.

Approach to Risk Management and Governance Arrangements

At Red Hat, open source is a development model and a business model. It shapes our business practices and corporate culture. Red Hat is committed to adhering to all applicable laws, rules, regulations and disclosure requirements in each jurisdiction in which we operate. We pay tax in accordance with local country laws and international guidelines. Specifically, our commitment to good corporate citizenship wherever we do business includes ensuring that we satisfy our tax obligations in compliance with local country laws and international guidelines. Senior executives report to the Audit Committee of our Board of Directors periodically on tax matters, and the Board of Directors, principally through the Audit Committee, ultimately oversees Red Hat’s approach to tax governance. Further, Red Hat’s Code of Business Conduct and Ethics, along with our system of internal controls, form the foundation of expected behavior on all matters, including tax.

Acceptable Risk Levels and Attitude Concerning Tax Planning

Red Hat embraces high standards of corporate governance, transparency and responsibility and strives to comply with all relevant tax laws, rules and regulations. The aim of the tax function is to take a prudent approach to tax risk and provide the business with the appropriate guidance, education and awareness to enable adherence of our tax strategy in all business matters. We seek to carry out tax planning that supports the company’s business goals, consistent with applicable local laws. We may engage in tax planning to contribute to the achievement of strategic goals and allow the company to manage its commercial affairs in a tax efficient manner. Where there is significant complexity in relation to a tax position, external advice may be sought, particularly in relation to our international tax obligations. This external advice is reviewed by the tax function in an effort to ensure that any action taken after considering such advice is consistent with our tax strategy and applicable laws and results in a prudent approach to tax risk.

Approach toward its Dealings with Taxing Authorities, Including HMRC

Similar to Red Hat’s approach to business, Red Hat seeks to maintain an open, collaborative and transparent relationship with the tax authorities, including HMRC. We look to develop and maintain positive and transparent working relationships with tax authorities, seeking to respond to information requests proactively and promptly. Further, Red Hat regularly engages external tax professionals to assist with discussions and technical aspects of any negotiations including tax audit resolution, as such experts are often more knowledgeable in local tax law and demonstrate the same open, collaborative relationship with the respective tax authorities that we expect from ourselves.