It’s a tradeoff many companies would gladly take advantage of: lower overall taxes in exchange for tax breaks. According to consultancy KPMG, 79 percent of respondents to its 2012 Tax Reform Survey Report said they would forsake tax incentives for a lower statutory rate. KPMG reported that if the corporate tax rate is reduced, most respondents felt the new rate would be 29 percent or less.
Despite the willingness to make the lower-tax-for-loophole trade, companies don’t expect much too happen in 2013, according to the survey. “Fundamental corporate tax reforms are not expected until 2014 or even later,” KPMG said, with almost 60 percent unsure or actually expect tax reform to take place in 2015 or even later.
In a NeuGroup Tech20 Treasurers’ Peer Group pre-meeting survey taken at the end of October, members of the group felt there was less than 50:50 chance of significant corporate tax rate reduction before 2020. About 15.5 percent thought reform would happen in 2013, 34.5 percent in 2014, and 46 percent saw it happening after 2017.
Many obviously want the issue addressed sooner than later. That’s because the corporate tax rate was the “top business tax concern cited for respondents, followed by taxation of international operations,” KPMG said. Forty percent of respondents overall said taxes were the top concern, with 42 percent saying this in terms of domestic business and 38 percent in terms of international operations. A total of 56 percent of respondents stated that lowering the corporate tax rate was most important, followed by 32 percent citing the reform of tax laws for foreign source income.
Not surprisingly most respondents to the survey felt that the US corporate tax system is flawed and needed to be changed. Of those, 63 percent said it was too complex.
The KPMG survey was conducted between July and September 2012, and included more than 680 business executives from both US domestic and multinational companies. You can read the rest of the results here.