Sustainability tax services

With urgent environmental and social action needed from business, the tax function has never had a more critical role in accelerating your sustainability strategy and building long-term value. EY Sustainability Tax can help you turn climate ambition into action through a holistic view of your business tax strategy. 

What EY can do for you

Governments are increasingly using fiscal measures to achieve their environmental targets. Many countries now impose specific levies, duties or energy and environmental taxes to discourage undesirable behaviour and raise revenues, whilst also offering tax incentives to promote green transition.

Businesses need to factor the growing role of environmental taxes, resource efficiency and low-carbon activity incentives into their planning and modeling when making investment decisions.

Whilst many businesses are rapidly adapting their strategies to the development of carbon regimes, environmental taxes and sustainability incentives, their tax departments are often not included in these discussions. In addition, carbon regimes are relatively new and may not be seen as a tax function.

As energy and environmental taxes continue to increase in importance, our team is ready to help your business with the following:

  • Management of and engagement with environmental taxes

    With the introduction of sustainability-related fiscal measures around the world, businesses are finding themselves needing to manage new costs and administrative activities. Key regimes include:

    • Carbon taxes and pricing schemes.

    • Plastic Packaging Tax.

    • Excise and fuel duties.

    The EY Sustainability Tax Services team help businesses to monitor and respond to existing and emerging environmental taxes and policies including understanding both strategic and operational implications.

    In addition, we help businesses to understand the cost impact of new measures. We help them generate strategies to ensure that financial impacts are mitigated, and that sustainability-focussed transformation (e.g. decarbonisation) is targeted effectively.

  • Identification, application and use of grants and incentives

    Governments are now incentivising sustainable business activity and investment through policy measures such as cash grants, public investment and tax reliefs. Identifying and making use of these mechanisms is paramount for businesses looking to invest sustainably.

    Our team support businesses throughout all the planning phases for securing and managing grants for sustainability-related projects, as well as helping them to claim research and development tax credits and capital allowances relief on current and past projects.

  • Optimisation of sustainable transformation

    As businesses invest and transform to deliver sustainability priorities, this introduces and changes tax and legal obligations. For example, a supply chain restructuring will have both direct and indirect tax implications, in addition to driving new legal considerations.

    We help businesses to understand the impact of sustainability transformation plans on their tax operating model and to build a resilient tax function to manage this transformation.

    We also support them in developing and implementing effective transfer pricing and indirect tax structures. This will facilitate and enhance their new footprints and operating models, which will in turn help deliver on their sustainability priorities.

  • Tax strategy, transparency and reporting

    Increasingly, businesses are being requested by regulators, investors and consumers to ensure transparency in their reporting on a variety of environmental, social and governance (ESG) matters, such as tax contributions, governance and tax structures. This is in addition to carbon footprint and other environmental impacts. 

    From information gathering to interpretation, our team help businesses to design, develop and distribute proportionate and effective tax strategy materials as the tax reporting landscape continues to evolve.

Our multi-disciplinary approach to tax sustainability will deliver long-term value through:

  • Reducing the cost of operations: The overall costs of operations can be reduced by ensuring energy and environmental taxes are managed, strategies are adapted and reliefs are identified and implemented.

  • Improving the return on investment (ROI) of sustainability-related projects: By identifying and securing sustainability-related incentives and government funding, the ROI of projects from renewable energy investments to energy efficiency retrofits can be positively impacted.

  • Mitigating risk: The threat of audit, penalties and reputational damage can be reduced by ensuring all compliance and reporting requirements are met.  

  • Engagement with policymaking: Companies also want to understand how environmental taxes will develop and how they can communicate with policymakers so that they achieve the desired outcomes without causing undue complexity for businesses.

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