Ambiguity in tax policy creates uncertainty
The Chief Operating Officer and other members of management of a US-based, private, industrial manufacturing firm with global operations wanted to understand the implications of proposed tax reform in the GOP House Blueprint as it pertained to the border adjustment tax, which proposes to dramatically change the way imports and exports are taxed for US companies.
What we did
PwC’s modeling tool, TRIM, provided the client with an easy-to-read overview that included a high-level tailored summary of the GOP House Blueprint and calculations based on previous year’s tax returns. It explained the implications that the GOP House Blueprint would have on their business, which demystified the issue of tax reform under the plan for the management team and provided insight regarding the magnitude of the impact.
The quick turnaround and easy to follow overview was received enthusiastically and shared among the firm’s executive team. TRIM’s analysis was able to provide clarity regarding the impact of the border adjustment and other tax changes in the plan, ultimately pointing to the fact that the company could anticipate a tax savings under the plan of approximately $2m per year. The TRIM analysis has led to more, deeper conversations about how modeling can help in future tax strategy and planning at their company.
Modeling used to develop tax strategy for private company
A private company needed to better understand how to prepare for potential changes to the tax code but didn’t have the in-house staff to conduct the necessary analysis. Specifically, they wanted to understand what provisions of the GOP House Blueprint would have the most significant impact for their company. Potential changes to tax policy was creating uncertainty in their planning and making it difficult to prepare accordingly.
What we did
PwC had the client answer a few questions and share their previous year’s tax return. The information was shared with PwC’s National Economic and Statistics practice, which ran models based on the client’s tax history and various scenarios based on key policy provisions in the GOP House Blueprint.
Within a few days, PwC was able to share a brief document that explained the impact tax policy changes could have on their company. The TRIM overview also included an easy-to-follow scenario plan for the tax team to leverage, which they did by sharing with the executive team to help them with additional strategic planning for the coming year.