KPMG’s Green Tax Index 2013 analyses 21 countries and shows that all have green tax systems that warrant attention. KPMG’s research identified over 200 separate tax incentives and penalties of relevance to corporate sustainability or ‘being green’.
KPMG’s Green Tax Index rankings indicate which countries are most active in using green tax incentives and penalties to drive sustainable corporate behaviour and achieve green policy objectives.
- The US tops the rankings primarily due to its extensive program of federal tax incentives for energy efficiency, renewable energy and green buildings. But when green tax penalties alone are considered, the US drops to 14th, indicating that US green tax policy is weighted heavily in favour of incentives.
- The UK ranks third and has a green tax approach balanced between penalties and incentives. The UK scores most highly in the area of carbon and climate change.
- France occupies fourth place in the overall rankings and is unusual in that its green tax policy is more heavily weighted towards penalties than incentives.
- Finland and Germany rank higher in the penalty index (fourth and ninth respectively) than they do in the incentives index (21st and 17th respectively) because tax is used less commonly than other countries as a tool to address green policy objectives. Germany favours low-interest loan programs and capital subsidies, while Finland focuses on green innovation and provides direct government grants.
See the full index
Get the green light
KPMG’s Green Tax Index aims to raise awareness of the rapidly evolving global green tax landscape and to encourage chief financial officers, tax directors and chief sustainability officers to work together.
Collaboration between the tax, finance and sustainability functions is important to ensure that businesses make the right decisions to create future value in a resource-constrained world.
KPMG's member firms recommend all stakeholders work together to:
- Monitor the landscape of green tax penalties and incentives worldwide and keep the business informed of developments.
- Review the business’ response to green tax penalties (such as carbon taxes and cap-and-trade systems) and explore strategies and investments that could reduce current and future financial exposure.
- Assess all projects in the pipeline to make sure no green tax incentives are missed.
- Calculate return-on-investment for proposals for sustainability programs on an after-tax basis.
- Explore green tax opportunities across the business and develop communication and collaboration between operations, tax, finance, sustainability and other relevant functions.
- Engage with governments and industry associations to provide a business point-of-view on how green tax tools can be designed to help governments achieve their green policy goals.