Moonbug UK Tax Strategy

Financial Year Ending 31 December 2026

Published in compliance with paragraph 16(2), Schedule 19, Finance Act 2016

1. Introduction and Scope

This document sets out the tax strategy of Moonbug Entertainment Limited (the “Company”) and its UK subsidiaries (together “Moonbug”, “the Group”, “we”) and is published in compliance with paragraph 16(2) of Schedule 19, Finance Act 2016. It applies to the financial year ending 31 December 2026 and will be reviewed and republished annually. The Board of Directors of Moonbug Entertainment Limited approved this strategy on 10 July 2026.

Moonbug is a global children’s entertainment company headquartered in London. We create, acquire and distribute children’s content — including franchises such as CoComelon, Blippi, Little Baby Bum and Morphle — and monetise that content through advertising-supported platforms, subscription streaming services, consumer products and brand licensing, music and live experiences. Moonbug is part of the international foreign group ultimately owned and controlled by Candle Media, LLC, headquartered in the United States.

This strategy applies to all UK taxes and duties relevant to our business, including corporation tax (and creative-sector reliefs), VAT, employment taxes (PAYE and National Insurance, including the off-payroll working rules), withholding taxes on cross-border royalties, customs duties and stamp taxes. It covers taxes we bear and taxes we collect on behalf of others, and it applies to all directors, employees and those engaged to manage tax matters on our behalf.

In this strategy, references to “UK taxation” have the meaning given in paragraph 15, Schedule 19, Finance Act 2016.

2. Our Overall Approach

Our content is trusted by families around the world, and we hold ourselves to a standard of conduct consistent with that trust. Our approach to tax reflects the same principles that govern the rest of our business: integrity, transparency and responsibility. In practice this means we are committed to:

Complying with all applicable tax laws, regulations and filing obligations in the UK and in every territory in which we operate;
Paying the right amount of tax, in the right place, at the right time, reflecting where value is genuinely created in our business;
Claiming reliefs and incentives — such as the UK’s audio-visual creative-sector reliefs — only in the manner and for the purpose Parliament intended;
Maintaining an open, honest and constructive relationship with HMRC; and
Ensuring tax is governed with the same rigour as any other material business risk, with clear Board-level accountability.

3. Tax Risk Management and Governance Arrangements

3.1 Accountability and ownership

Ultimate responsibility for this tax strategy rests with the Board of Moonbug Entertainment Limited. Executive ownership of tax sits with the Chief Financial Officer, who is also the Group’s Senior Accounting Officer (SAO) for the purposes of Schedule 46, Finance Act 2009. Day-to-day management of the Group’s tax affairs is delegated to the Senior Director of Global Tax, supported by the wider finance function and by reputable external advisers where specialist expertise is required.

3.2 How we identify and manage tax risk

Tax risk arises in our business principally from the volume and complexity of cross-border royalty and platform revenue flows, intercompany arrangements within an international group, the application of creative-sector tax reliefs, a large and flexible creative workforce, and the pace of change in both our industry and tax legislation. We manage these risks through:

A Tax Risk & Control Register, refreshed at least annually, which records each material tax risk, its owner, and the key controls that mitigate it;
Documented processes and controls over the end-to-end flow of data from third- party platform and royalty reporting through our finance systems into tax returns;
An annual SAO testing programme, under which the design and operation of key tax controls are independently tested, deficiencies are tracked to remediation, and the results support the SAO’s annual certification to HMRC;
Defined approval thresholds, so that significant or unusual transactions — including new licensing structures, group reorganisations and material intercompany arrangements — receive appropriate tax review before they are entered into;
Engagement of external advisers where matters are complex, uncertain or material, and internal review and challenge of adviser output before any filing is made; and
Training and awareness for finance, production and business-affairs teams whose decisions have tax consequences, including on employment-status and off-payroll working obligations and on our obligations under the Criminal Finances Act 2017 to prevent the facilitation of tax evasion.

3.3 Systems and people

We invest in the systems, data quality and professional capability needed to meet our compliance obligations accurately and on time. Tax-critical processes, systems and spreadsheets are subject to access controls, version control and periodic review under our SAO framework.

4. Our Attitude to Tax Planning

We undertake tax planning only where it supports genuine commercial activity. Commercial and operational needs — creating outstanding children’s content and bringing it to families worldwide — come first; tax is one factor among many in business decisions, never the driver of them.

In particular:

We do not engage in artificial or contrived arrangements, or transactions without commercial substance, whose purpose is to obtain a tax advantage;
We do not use marketed tax-avoidance schemes, and we have no appetite for arrangements that would be notifiable under the Disclosure of Tax Avoidance Schemes (DOTAS) rules or that could engage the General Anti-Abuse Rule (GAAR);
We claim legislated reliefs, allowances and incentives — including creative-sector reliefs for qualifying children’s programming, capital allowances and double-taxation relief — where we satisfy the qualifying conditions and in the way Parliament intended;
We price transactions between Moonbug and other members of the Candle Media group on arm’s-length terms, in accordance with UK transfer pricing legislation and OECD Transfer Pricing Guidelines, supported by appropriate documentation and intercompany agreements; and
Where the application of tax law to our business is genuinely uncertain — as can arise in a fast-evolving digital media industry — we take appropriate professional advice and, where suitable, seek clarity from HMRC, including through statutory or non-statutory clearances.

5. The Level of Tax Risk We Are Prepared to Accept

Moonbug has a low appetite for tax risk. We seek certainty in our tax affairs wherever reasonably possible and we do not enter into transactions whose intended outcome depends on an interpretation of tax law that we believe is unlikely to be sustained.

Where uncertainty cannot be eliminated — for example, because the law is unclear, evolving or untested in its application to new digital business models — we assess the position carefully, take external advice where appropriate, adopt filing positions that we consider more likely than not to be correct, and disclose appropriately in our returns. Significant judgements and uncertain positions are escalated to the Chief Financial Officer and, where material, to the Board or Audit Committee.

We consider the potential impact of tax decisions on our reputation, our relationships with HMRC and other tax authorities, our partners and platforms, and — above all — the families who trust our brands.

The Moonbug Group has a zero-tolerance policy with regard to tax evasion, anti-bribery and money laundering. Moonbug is committed to complying with all applicable laws and regulations relating to such matters.

6. Our Approach to Dealings with HMRC

We are committed to an open, honest, transparent and constructive working relationship with HMRC. In practice this means we:

File complete and accurate returns and pay the tax due on time;
Respond to HMRC enquiries and information requests promptly, fully and professionally;
Engage with HMRC in real time on significant transactions, areas of uncertainty, or changes in our business where early dialogue is beneficial, including through our Customer Compliance Manager where one is allocated;
Make fair, timely and unprompted disclosures of any errors identified in returns already submitted, and work with HMRC to resolve them quickly, paying any additional tax, interest and penalties that are due;
Interpret legislation in a reasonable way consistent with its intention, and seek to resolve any differences of view with HMRC through open discussion wherever possible; and
Support the effective operation of the SAO regime, including the annual certification of our tax accounting arrangements.
Moonbug’s goal in working with tax authorities is to avoid disputes and to strive for resolution or agreement as early as practical should a dispute arise.

7. Review, Approval and Publication

The Senior Director of Global Tax reviews this tax strategy annually, and the Board of Moonbug Entertainment Limited approves it before publication on the Company’s website by the end of the relevant financial year. The strategy remains in effect until replaced by the following year’s publication. The Group monitors compliance through its tax governance framework, including the annual SAO testing programme, and reports material matters to the Board.

Moonbug Entertainment Limited regards the publication of this strategy as complying with its duty under paragraph 16(2) of Schedule 19, Finance Act 2016 for the financial year ending 31 December 2026.

Approved by the Board of Directors of Moonbug Entertainment Limited
Yitzchok Shmulewitz, Chief Financial Officer and Senior Accounting Officer

10 July 2026