Are environmental taxes, charges, fees and incentives the tax department’s problem?

One of the greatest risks for business of ever-increasing environmental taxes is that they fall through the cracks, either in terms of compliance, or less than optimal management across the business.

Responsibility for these types of business costs (assuming they cannot be passed on) is often unclear. It can fall on one of a number of different departments.

In recent times we have seen ‘sustainability’ spread from something that is managed separately from core business concerns by a corporate responsibility department, to a fundamental business issue that needs to be embedded throughout every department within a business.

We believe that the tax department has a role to play in managing the sustainability agenda and that, to do so effectively, it must work cross functionally with business units to evaluate opportunities for resource efficiency and product redesign on an after-tax basis.

For the tax department, this means not only understanding its role in achieving the business’ sustainability strategy but also making sure the business is paying the right amount in environmental taxes.

Businesses are beginning to wake up to the fact that they typically have no idea what they are paying in environmental taxes locally, let alone globally.

Environmental taxes can be a hidden cost to business. They tend to be lost in invoices which never make their way out of the accounts payable department or never get embedded in the supplier’s costs. These costs represent threats and opportunities, and currently they are going unnoticed by the tax department.

…Cull from PwC report “shifting the balance: from direct to indirect taxes”.