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Tax Offerings for the Aerospace and Defense Industry
In today’s global marketplace, aerospace and defense (A&D) companies face a number of major trends and issues that impact their businesses from a tax perspective. Among the most notable are: Managing risks; Globalization and business transformation; Strategic acquisition, divestitures, and joint ventures; And, Innovation, collaboration and research and development (R&D). These issues have both tax compliance and planning implications that cannot be ignored. Although addressing them can be a tough balancing act, doing so may unlock hidden value for your organization. Deloitte can help.
Global research & development (R&D) tax services
Innovation, collaboration, and R&D are foundational to the A&D industry. As A&D businesses look overseas for growth, they naturally consider locating operations in countries that offer tax credits and incentives, whether associated with R&D activities, personnel training and education, or a variety of other activities. Qualifying for these incentives often requires specialized knowledge for the application of tax law to a particular business, along with an understanding of the tax law nuances, including tax authority interpretations in the various jurisdictions. As a leader in global tax credits and incentives consulting, Deloitte can help you explore tax planning opportunities at the state, federal, and international levels, as well as addressing any current claims under audit. Our experienced tax specialists can help you analyze potential opportunities and answer such questions as how the location of your operations may make a difference, which activities may qualify for credits or incentives, and what documentation may be required to qualify.
Managing tax compliance risks
With reduced defense spending in the US, A&D companies are looking at cross-border opportunities to grow their businesses while they simultaneously seek ways to reduce domestic contract costs. Their cross-border growth comes with growing tax compliance risks, such as those associated with changes in US transfer pricing rules, new tangible property regulations, Foreign Account Tax Compliance Act (FATCA) requirements, and expiring tax credit extenders. They also face increased tax compliance scrutiny in other countries where enforcement of transfer pricing, value added tax (VAT), and goods and services tax (GST) laws is on the rise. Deloitte helps A&D companies address these types of tax risks through a wide range of tax planning and compliance services. We can assist you with automating tax systems from record to report and helping transform tax activities across the people, process, technology, and data dimensions to free up time for your tax department to be a better strategic partner to the business.
Globalization and business model optimization (BMO) tax services
As A&D companies look to foreign markets for new business to offset shrinking US defense budgets, they are restructuring their supply chains to take advantage of cost-effective movement of goods and people relating to their operations. The tax function can play a very important role in this process by helping capture tax efficiencies across the supply chain as restructuring takes place. Deloitte can assist through our Business Model Optimization (BMO) offering, which helps align your operations and tax planning for the purposes of reducing costs and improving business processes. Our BMO services are delivered by a dedicated, cross-competency, global team experienced at aligning tax planning and business strategy, intellectual property (IP) planning, and cash utilization planning. BMO services help integrate operations and tax planning in a way that allows your business to make strategic decisions on an after-tax basis.
Tax implications for business transformation
In recent years, many A&D companies have undergone transformation of their finance functions. On one hand, these initiatives help companies manage cash flow and costs across multinational and multidivisional operations. On the other hand, they require new sophistication in tax technologies and processes to keep pace with the business. With insight into the tax considerations and challenges that accompany enterprise transformation, Deloitte can help your organization look for ways to refine tax compliance processes in the face of transforming structures and explore benefits that are potentially available.
Acquisitions, divestitures, and joint ventures tax services
The shifts in US defense spending and A&D companies' resulting search for new opportunities abroad has only accelerated the trend of companies divesting non-core businesses and acquiring core reinforcements and new technological capabilities. Again, these decisions and resulting actions present many potential tax issues and opportunities. At the same time, companies exploring joint ventures to gain access to technologies or foreign markets will want to understand the tax implications of such partnerships and plan accordingly. With our one-stop merger and acquisition (M&A) support capabilities, Deloitte can help your company with M&A-related tax planning and compliance, from pre-transaction planning, modeling, and due diligence to post-transaction integration and monitoring.