Senior tax professionals are most worried about the prospects for U.S federal business tax reform and the heightened regulatory environment in transfer pricing, according to a new survey by KPMG.
The survey, released Tuesday ahead of the firm’s 2013 U.S. Tax Summit this week in Orlando, Fla., found that 26 percent of the nearly 250 senior tax professionals in the U.S who were polled cited the pursuit by regulators of transfer pricing adjustments as their biggest global tax concern, followed by the potential for U.S. federal business tax reform, at 24 percent.
Another top concern for the tax professionals polled was the increasing number of countries aggressively pursuing “permanent establishment” as an approach to asserting a jurisdiction’s taxing authority, coupled with the lack of a uniform approach by countries (15 percent). Another challenge, cited by 12 percent of the survey respondents, related to obtaining meaningful data that enables a company to project its annual effective tax rate with confidence.
“It’s clear from our survey that tax department leaders are focused on how to manage in the persistent and active regulatory environment in transfer pricing and are also devoting increasing attention to how changes in U.S. tax legislation will affect their global operational decisions,” said Jeffrey C. LeSage, vice chairman of KPMG’s U.S. tax practice, in a statement. “We believe that these and other key tax issues will present U.S. companies with challenges and opportunities as the global business landscape continues to evolve.”
The survey also revealed that only 12 percent of tax departments are involved in early-stage discussions around cloud-related business transformation. When it comes to decisions on cloud-enabled business transformation, 30 percent said their department is left out of the decision-making process.
Four out of 10 of the tax executives polled said they had not yet evaluated the potential impact of the Marketplace Fairness Act of 2013, despite the Senate’s recent passage of the bill, which would allow states to require online and other out-of-state merchants to collect and remit sales and use taxes on products and services they sell. Only 5 percent said they had evaluated the legislation and believe it will have a significant impact.
When asked what new regulatory, legislative or policy development has made the most impact on their company’s global import and export activities, 21 percent of the respondents cited aggressive enforcement of customs valuation laws associated with related party pricing and the “dutiability” of royalties.
Asked about their company’s sustainability strategy, 37 percent of the survey respondents responded that they have no significant role as a tax executive in implementing that strategy for their companies. Instead, 28 percent said their role involved strategic implementation to managing the overall after-tax return of sustainability projects.
