Tax Offerings for the Automotive Industry
In our work with leading companies in the automotive industry, our clients describe a number of issues that impact their businesses today from a tax perspective. Among the most notable are: Consolidation Globalization and new market development; Talent and innovation; Enterprise risk management; Operational effectiveness; And, Profitability. These issues have tax planning and compliance implications that cannot be ignored. Although addressing them all can be a tough balancing act, doing so can unlock hidden value for your organization. Deloitte can help.
Mergers and Acquisitions (M&A) Tax Support
Increased M&A activity across the automotive industry is being driven by a number of converging factors including the need to achieve scale for growth in new markets, fill product gaps, and maintain returns in slow growth mature markets. Tax considerations associated with M&A can be complex and require specialized experience, particularly with cross-border deals. With Deloitte's one-stop merger and acquisition (M&A) support capabilities, we can help your company with a range of M&A-related tax services, from pre-transaction planning, modeling, and due diligence to post-transaction integration, compliance, and monitoring. We can also help you navigate other tax, accounting, legal, regulatory, cultural, and labor issues often encountered in cross-border M&A transactions.
Tax Implications of Globalization and New Market Development
Growth markets like the BRIC countries and other emerging markets represent a massive opportunity for automotive companies. Manufacturers and suppliers are scaling up for these opportunities through a combination of inbound investments, joint ventures, and M&A cross-border transactions, while at the same time developing global supply chain platforms and building R&D centers around the world. With this expansion, however, come tax risks. Foreign tax authorities often treat automotive issues differently than the U.S., particularly in terms of tax policy, regulation, and enforcement. Such differences may translate into a broad range of tax technical issues, from inbound investment entity structuring, transfer pricing, and customs and duty planning, to international employee assignments, income repatriation to a non-U.S. parent, and disposition of U.S. companies.
Business Model Optimization (BMO) Tax Services
Deloitte's Business Model Optimization (BMO) specialists can help you 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. In recent years, many automotive companies have transformed their finance functions. With insight into the tax considerations and challenges that accompany this type of enterprise transformation, Deloitte can help your organization look for ways to refine tax planning and compliance processes in the face of transforming structures and explore benefits that are potentially available.
Tax Implications for Talent and Innovation
Global societal trends and technological advancements such as telematics are redefining the role of the car. As a result, innovation in the automotive industry is driven by R&D, safety, fuel efficiency mandates, and consumer demand. Talent-driven innovation is vital to an automaker’s ability to compete, particularly given the technology already embedded in today’s vehicles and trends forecasting increased innovation in connectivity, safety, and propulsion. As a result, the need to attract and retain highly talented workers capable of developing tomorrow’s innovations and maintaining vehicles already on the roads is paramount. Deloitte offers well-rounded plans and program development strategies that can help transform global employment programs in a tax- and cost-efficient manner. Our services include compensation and benefits, international assignment services, international human resources, technology consulting, and risk, talent, and rewards.
Enterprise Risk Management (ERM) Tax Services
Enterprise risk management is a top priority in the automotive industry, automakers today are under increasing pressure to address the tax impact of their decisions. Integrating tax risk management into your business operations and strategic processes enables you to take a risk-based approach to decision making, capitalizing on risks that create value while steering away from those that don’t. Deloitte can help you identify and prioritize tax risks across the enterprise, assess your tax risk capabilities and develop the tools, processes, and structures needed to build a sustainable tax risk management program.
Tax Services for Operational Effectiveness
Increased global competition drives automakers to focus even more intently on cost reductions. Finance transformation, enterprise resource planning solutions, and other technology enhancements are driving efficiencies in the marketplace. For tax departments to actively participate in cost reduction and value creation activities, a broader transformation is required. Deloitte can help your organization leverage tax technology solutions that automate and streamline tax-related processes to reduce errors and increase integration between tax and finance. The objective is a transparent and efficient tax function — one that can handle compliance and planning issues while expanding its strategic support to the broader business. Deloitte has extensive experience in planning and deploying the tax functionality of the major financial and tax systems and integrating them with financial systems.
Profitability Tax Solutions
As the economy stabilizes, demand for automobiles grows, and the industry returns to profitability, automakers are releasing valuation allowances against their deferred tax assets and watching their balance sheets become deleveraged. This is creating renewed focus on sustained effective tax rates, which is driving the C-suite to focus on tax and making global effective tax rate planning a higher priority for CFOs. From a cash tax planning standpoint, growth and stability means that many automakers can no longer leverage net operating losses. Our federal, state, and international tax specialists can help you explore tax planning opportunities through broad-ranging strategic tax reviews. We perform a high-level review of tax returns, including U.S. federal taxes and the range of state and local taxes, to identify potential tax savings and refund opportunities. We can also assist with capital expenditure planning, helping you incorporate sophisticated analytics for comparing the value of different investments in your portfolio and determine which are most advantageous.