A majority identified the prospect of steeper taxes in 2016 as the greatest threat to business growth as Democrats look to substantially raise rates on corporations in order to fund a multitrillion-dollar spending package.
A new survey by KPMG published on Wednesday shows that chief executives ranked tax risk as the top threat to their organization's growth ahead of supply chain limitations, climate change and cyber security.
From a practical perspective, tax has never been as top of the mind for CEOs as it has been over the last year, said Greg Engel, vice-chair of KPMG. With another round of U.S. tax reform on the horizon, to a monumental global tax deal that will affect multinationals and digital services, it s no wonder CEOs identified tax risk as one of their top threats to growth. Democrats are currently crafting a $3.5 trillion bill that seeks to dramatically boost federal investment in education, child care and paid family leave and would be funded by higher taxes on corporations and wealthy Americans.
However, some proposals have received an endorsement from the Democrats - Republicans by raising the corporate tax rate to 28% from 21% and quickly enlarging parts of the country's formal tax law in 2017 for 2016 companies. Democrats will rely on slim margins in both House and Senate to allow virtually every caucus member of the Senate to vote in lockstep for the passage of the bill.
5% of the population.
The Biden administration is also spearheading an international movement to protect a global minimum rate on companies' foreign profits, a move intended to stop the creation of restricted tax havens that allow multinational companies to shield their profits, while giving bigger nations more tax revenue from multinational firms.
Treasury Secretary Janet Yellen said a global tax, which would apply to companies' overseas profits, would eliminate what she describes as a global race to the bottom in terms of corporate taxes.
So far, 130 countries in the Organization of Economic Cooperation and Development have endorsed the global minimum rate which is a growing concern for CEOs across the world. More than three-fourths about 77% of the respondents said the proposed global minimum tax rate is a significant concern for their growth goals over the next three years.
Is it likely that CEOs and the broader C-suite are on the edge of their seats asking How likely? Engel said: This uncertainty, after corporate tax and finance departments just acclimated themselves to the major reforms brought about by the 2017 Tax Cuts and Jobs Act, has created a great sense of unpredictability leaving many leaders questioning how and when to prepare? The KPMG survey of 1,300 executives at large companies includes responses from more than 400 executives in the U.S. It was conducted between June 29 and Aug. 6.