The US, Japan, UK, France, South Korea and China have been named by KPMG International as the most active in using tax as a tool to drive sustainable corporate behaviour and achieve green policy goals.
The finding is contained in the first KPMG Green Tax Index, launched at the 2013 KPMG Asia Pacific Tax Summit in Shanghai.
The KPMG Green Tax Index is intended to raise corporate awareness of the rapidly evolving and complex global landscape of green tax incentives and penalties, and to encourage tax directors and sustainability chiefs to work together to factor green tax considerations into investment decisions.
“Green taxation is a rapidly evolving and increasingly complex area,” says Greg Wiebe, KPMG’s Global Head of Tax. “A multitude of challenges are facing tax functions worldwide. And, yes, this is an area of tax management requiring time, effort and dollars. However, if addressed with knowledge and pro-activity, the challenges can be opportunities.”
“Governments are increasingly using green tax as a tool to change corporate behavior and to address serious challenges such as energy security, resource and water scarcity, and climate change,” says Yvo de Boer, KPMG’s Special Global Advisor, Climate Change & Sustainability.
“Our analysis shows that at least 30 new green tax incentives, penalties or significant regulation changes have been introduced in the countries we studied since January 2011. A pro-active approach to green tax can help companies reduce the cost of strategic investments, drive innovation, improve efficiencyand secure competitive advantage.”
The US tops the ranking primarily due to its extensive program of federal tax incentives for energy efficiency, renewable energy and green buildings.
Japan is ranked 2nd overall but, in contrast to the US, scores higher on green tax penalties than it does on incentives. Japan also leads the ranking for tax measures to promote the use and manufacture of green vehicles.
South Korea ranks 5th overall and, in common with the US, has a green tax system weighted towards incentives rather than penalties. South Korea leads the ranking for green innovation which suggests that South Korea is especially active in using its tax code to encourage green research and development.
China ranks 6th with a green tax policy balanced between incentives and penalties and focused on resource efficiency (energy, water and materials) and green buildings.