From a regulatory and tax perspective, transforming a company can feel like tiptoeing into a minefield: new jurisdictional issues, new tax liabilities, new environmental laws, new reporting rules. It’s not surprising, then, that when PwC’s 26th Annual Global CEO Survey asked executives which factors will have the greatest impact on their company’s financial outcomes over the next ten years, changes in regulation ranked near the top, second only to changes in consumer demand. The reality is that tax and regulatory expertise can be as essential to business-model reinvention as R&D, funding, and culture change. What’s more, tax experts can do more than merely steer around regulatory obstacles—they can boost ROI and even create value by unlocking the potential of tax credits and incentives.
Consider the experience of several companies that have worked with PwC to undertake decarbonisation initiatives. One is a global cement manufacturer in Canada that was seeking to assess grants related to modernising a plant to reduce emissions. The organisation modelled cost scenarios with and without available government incentives and funds. It was clear the company should apply for the grants. Indeed, it turned out that for projects the cement maker was considering, with a capital value of around US$1.5 billion, the incentives equaled 50% of the cost. In another instance, a group of multinational organisations planned to build a 100-megawatt wind farm. The question was where. A comparison of the costs and benefits of building the plant in a number of jurisdictions revealed the best location to be the Netherlands. In part, this was because of the country’s aggressive decarbonisation commitments. But what clinched the decision was that the country’s tax incentives and investment opportunities would not only make the wind farm more affordable but also amplify the project’s decarbonisation potential by enabling the plant to convert excess power into green hydrogen—which in turn helped the project developers optimise their funding opportunities.
It all points to a too-often overlooked imperative for the C-suite: when embarking on a transformation journey, make sure the members of your tax team are empowered as key decision-makers.
Explore the findings of PwC's 28th Annual Global CEO Survey.
Related content
Contact us
