16th Annual Global CEO Survey: A focus on tax

Tax is the top business threat to growth in today's economy

The tax burden is the top threat to business growth in today’s economy

CEOs are anxious about the global economy, and their confidence about growth, in the short term at least, remains fragile. Many are casting a wary eye over how governments are addressing their deficits — and seeing a potentially rising tax burden as the key threat to their business’s growth.

And this worry is not unfounded: after an eight-year trend of decline, the total tax rate appears to be stabilising. Our 2013 Paying Taxes study also reveals that corporate income tax — the headline tax — in fact makes up just over a third of organisations’ total tax rate contribution.









Corporations' tax contributions are being closely scrutinised by more stakeholders

How much influence do the following stakeholders have on CEOs’ business strategies

CEOs today are feeling pressure from a growing number of stakeholders, as traditional groups have been joined by new influencers — with social media and the 24-hour news cycle giving voice to an ever more diverse (and often noisy) set of observers.

We’ve seen recent cases where corporate tax practices have become a matter of significant public interest. CEOs are fully aware of how closely they are being watched, and are adapting their business strategy in response.

Trust is an essential component of the relationship between an organisation and all of its stakeholders. Companies must understand their stakeholders’ interests in their tax reporting — and determine if, and how best, to communicate key messages.







New opportunities for growth are emerging, with very different tax landscapes

paying taxes data map

While CEO confidence for revenue growth remains fragile, particularly in Western Europe, confidence is much greater in less-developed markets.

Business leaders are continuing to keep their eyes firmly on where the growth is — Indonesia, for example, made the list of top 10 investment destinations for growth for the first time.

Where focused on cross-border activity, of course, businesses must understand local regulations and attitudes towards tax. Our Paying Taxes study compares countries’ tax systems like-for-like, considering not just corporate income tax but the full impact of all business taxes, as well as the compliance burden.

 

Interactive map: Ease of paying taxes in CEOs’ top 10 investment countries


Paying Taxes 2013 is a unique study from PwC, World Bank and IFC. The study investigates and compares tax regimes across 185 economies worldwide using a case study company, and ranks them according to the relative ease of paying taxes.

Tax strategy and its impact on reputation should be a key strategic priority

To what extent do CEOs anticipate changes to investment

Governments, regulators and the public are focusing on corporate tax practices in a way we haven’t seen before. And over a third of CEOs expressed the view that a lack of trust in their actions on the part of these stakeholders would pose a serious threat to their business growth.

So it comes as a surprise to see how far down managing corporate reputation is on the CEO priority list, with almost half not claiming this as a priority for 2013. A further surprise is that although CEOs told us they consider their tax burden the number-one threat to growth, half of businesses did not plan to prioritise tax strategy this year.

This presents a serious risk. Tax is on the agenda of an increasing number of stakeholders — and more tied than ever to corporate reputation. Tax strategy and managing this link to corporate reputation should become a higher strategic focus for business in 2013.





Tax strategy and its impact on reputation should be a key strategic priority

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CEO Insights blog
 
See what Rick Stamm,
Vice Chairman of
Global Tax, has to say
on tax and reputation
 

CEOs are anxious about the global economy, and their confidence about growth, in the short term at least, remains fragile. Many are casting a wary eye over how governments are addressing their deficits — and seeing a potentially rising tax burden as the key threat to their business’s growth.

And this worry is not unfounded: after an eight-year trend of decline, the total tax rate appears to be stabilising. Our 2013 Paying Taxes study also reveals that corporate income tax — the headline tax — in fact makes up just over a third of organisations’ total tax rate contribution.









 
 

Contacts

Contacts
Rick Stamm
Vice Chairman, Global Tax
Tel: +1 (646) 471-1035
John Preston
Global Head of External Relations, Regulation and Policy for Tax
Tel: +44 (0) 20 780 42645
 
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CEO interview quotes

"The number one thing that will make people more at ease is transparency. Being a public company, the preservation of transparency is an inherent obligation for us. We keep in touch with our customers in order to understand their needs. Everything is interconnected."


Dr. John Coustas
President and Chief Executive Officer, Danaos Corporation

" Leadership is about being connected. Leadership means you are not only connected with your clients, but you're connected with the markets... you just have to be connected and understand what it means to be a leader, what it means to be current. You can't be a leader without being current."


Larry Fink
Chairman and Chief Executive Officer, Blackrock Inc.

"The regulator and government have always been major stakeholders but today there is also a very different new set of stakeholders, right down to you and me. The public at large are stakeholders because they can take part in discussions on social media. They can influence our decisions and we actually want them to do that."


Steve Holliday
Chief Executive Officer of National Grid Group Plc.

"We get a license to operate not just from the regulators but also from civil society. To maximise our presence on the ground, we have to meet the expectations of society as a whole."


Piyush Gupta
Chief Executive Officer and DirectorDBS Group

"Leadership is a critical element for all companies, and it’s based on the courage and conviction that a leader has to have, as well as ethics in doing the right thing. Employees want to look at their leadership, whether it’s the board of directors or their CEO, as good people doing the right thing for the business, the company and the people."


Douglas D. Tough
Chairman and Chief Executive Officer, International Flavors & Fragrances, Inc.

"Some European countries have a high level of productivity while others have a lower level of productivity while they are all wrapped up in a ‘monetary corset’ subject to different tax regulations."


Julio Patricio Supervielle
Grupo Supervielle's CEO and Banco Supervielle's Chairman
 
 

Benchmarking tool

How do your perspectives compare with those of the CEOs in our 16th Annual Global CEO Survey?

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Global CEO Survey: Trust

Discover what steps CEOs are taking to rebuild trust in a new world of 24/7 media scrutiny and influence.

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Paying taxes 2013

A unique study from PwC, World Bank and IFC, this study provides data on tax systems in 185 economies around the world.

Learn more