Komatsu Ltd. (President & CEO: Kunio Noji; hereinafter "Komatsu") hereby announces that Tokyo Regional Taxation Bureau is conducting a tax investigation concerning transfer pricing for a six-year period from the fiscal years ended March 31, 2004 to 2009. This involves internal transactions with two subsidiaries in the United Kingdom and Belgium in the construction, mining and utility equipment business. The Bureau has pointed out that Komatsu has recorded approximately JPY17.4 billion less in profits in Japan (the same amount more in the U.K. and Belgium).

Concerning taxation related to pricing of equipment for internal transactions among Komatsu Group companies, the so-called transfer pricing taxation, Komatsu has complied with the laws of Japan and other countries, ensured appropriate pricing by establishing in-house rules and making other efforts, and properly paid taxes on the profits from internal transactions in Japan, the U.K. and Belgium. In the course of the investigation, Komatsu has explained its stance on transfer pricing. However, Komatsu and the Bureau have a difference in opinion concerning the matter, and Komatsu believes that it is still difficult to resolve the difference.

As of today, Komatsu has not received the notice of correction, i.e., the conclusion of this matter. But upon receiving the notice, Komatsu is planning to challenge the Bureau's decision for correction and file for intergovernmental negotiations between Japan and the U.K. as well as between Japan and Belgium on the grounds of avoiding double taxation. As a result of the negotiations, Komatsu believes that it should be able to receive tax refunds corresponding to its additional tax payment in Japan.

Komatsu believes that the possibility of receiving the tax refunds in the U.K. and Belgium is high as a result of the negotiations. Accordingly, with respect to effects of this matter on the business results for the fiscal year ending March 31, 2010, Komatsu is planning to record an allowance of approximately JPY2.6 billion for the tax expense as the sum of the difference in corporate tax rates of the three countries (the difference between additional tax payment in Japan and tax refunds in the U.K. and Belgium) and the incidental tax amount in association with the additional tax payment.