The KPMG Green Tax Index 2013 

An exploration of green tax incentives and penalties

Energy security, water scarcity, raw material availability, pollution and client change are just some of the environmental challenges facing the world. In response, many governments are setting green policy objectives and increasingly using taxes as a tool of choice to help change corporate behavior and help to achieve these goals.


The KPMG Green Tax Index, released recently at the 2013 KPMG Asia Pacific Tax Summit in Shanghai by KPMG International, analyzes green tax penalties and incentives in 21 major economies across Asia Pacific, Europe and the Americas. It is intended to raise corporate awareness of the rapidly evolving and complex global landscape of green tax incentives and penalties, and to encourage business leaders, tax directors and sustainability chiefs to work together to factor green tax considerations into investment decisions.


The KPMG Green Tax Index reveals that six countries - the United States, Japan, the United Kingdom, France, South Korea and China - are the most active in using tax as a tool to drive sustainable corporate behavior and achieve green policy goals.


Country Ranking from KPMG's Green Tax Index


US 1 Netherlands 8 Finland 15
Japan 2 Belgium 9 Germany 15
UK 3 India 10 Australia 17
France 4 Spain 11 Brazil 18
South Korea 5 Canada 11 Argentina 19
China 6 South Africa 13 Mexico 20
Ireland 7 Singapore 14 Russia 21


The ranking shows: 

  • The US tops the ranking primarily due to its extensive program of federal tax incentives for energy efficiency, renewable energy and green buildings.
  • When green tax penalties alone are considered, the US drops to 14th, indicating that US green tax policy is weighted heavily in favor of incentives.
  • 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.
  • The UK ranks 3rd 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 4th place in the overall ranking and is also unusual in that its green tax policy is more heavily weighted towards penalties than incentives.
  • 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.
  • The US uses green tax penalties less than other Western developed nations, apart from Canada. The only countries in the Index that impose fewer green tax penalties than the US or Canada are emerging economies such as Brazil, India, Mexico and Russia. China and South Africa are both more active than the US or Canada in imposing federal green tax penalties.


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