Most international companies take account of a country's tax regime when deciding where to locate, according to research by PwC, which also indicates growing concern over the increasing tax burden.
The firm’s survey, Tax strategy, corporate reputation and a changing international tax system, is based on responses from 1,344 CEOs. It shows the majority (63%) say government tax policy plays a part in where they choose to operate their business.
While CEOs in more mobile businesses such as the asset management sector were more likely to see tax policy as a key factor ( 70%), over half (57%) of CEOs of mining companies, which must follow available resources, also rated this as important.
Mary Monfries, head of tax policy at PwC, said: ‘Tax is undoubtedly an important part of the decision mix. When considering tax systems, it's not just the tax costs, but the stability of the regime and compliance burden that matters.’
Overall, 70% of CEOs said they are worried that the increasing tax burden – both cost and compliance – is affecting their ability to grow. UK CEOs are slightly more positive than their global counterparts, with 64% concerned about the impact of their tax burden on growth.
UK CEOs are also less negative about the efficiency of their tax system, with 27% reporting that the government where their business is based has created an efficient and internationally competitive tax system, compared with 17% globally.
Monfries said: ‘CEOs don't think the tax system has changed to reflect how multinationals operate and want to see it updated. But there's concern individual governments will take their own action to deal with outmoded rules, rather than working through coordinated efforts, such as those led by the OECD. The concern is the prospect of a period where international trade can't be done without either double taxation or tax authorities being unable to reach agreement on their respective taxing rights.’
