We are pleased to introduce a new article on our propositions for potential policies for governments to consider in helping to close the gap on the pandemic debt they’ve accumulated.

Governments and companies across the world are now facing even more new challenges and actively assessing their economic options. In this article, we are seizing the opportunity to add to the discussion by sharing our global perspective on the current state of private companies in the wake of the pandemic, with suggested actions for governments to consider through a fresh entrepreneurial lens to support and accelerate the growth of these resilient companies.

These suggested actions are based on our steadfast belief that private companies can make a tangible contribution to the economic recovery in their countries.

And we also believe, as tax professionals, that we have a role to play by helping governments understand and recognize the extraordinary social and economic impact that privately owned businesses have.

We welcome your feedback on our observations and proposals. Regular updates will be posted on the KPMG Private Enterprise Tax website. We encourage you to join the dialogue and contribute more new ideas for helping to revive the world’s economies.

Emerging from a global pandemic

The impact of COVID-19 has been vast and unpredictable. Fortunately, most governments sped to the rescue with social and financial lifeboats to buoy up their countries’ businesses and citizens. What comes next?

Should support for private companies be a policy priority?

For every business that faced challenges during the pandemic, it was easy to find one or two that did incredibly well. That’s the beauty of privately owned businesses. And supporting the resilience, adaptability, innovation and long-term focus of these companies should be a policy priority for governments everywhere.

Where do governments go from here?

Now that most pandemic relief programs have expired, what might governments do to deal with their pandemic debt. This is not the only burning issue on their agendas. Unrelated to the pandemic, 130 countries came to an historic agreement on 1 July 2021 when they approved a statement providing a framework for reform of the international tax rules. Keeping the framework alive has already become a challenge.

The world can’t tax its way out of debt

For improved economic performance, a more holistic, longer-term approach is required. It includes economic policy changes — not just tax changes — in order to help encourage entrepreneurship, introduce workplace advances, accelerate environmental and societal improvements and work to remove barriers to entry in certain industries.

What’s missing from the global tax debate?

It has been dominated by large multinationals and corporates, with inadequate recognition of how other business types and sizes contribute to economic stability and long-term sustainability. Privately owned businesses that are ‘in it for the next quarter century — not the next quarter’ contribute to in-country economic growth and prosperity and create jobs in local communities.

Policy building blocks — segments, sectors, regions, people

We propose four targeted policy building-blocks that recognize the impact of the private business segment on local economies; sector- and region-specific policies that focus on those hardest hit by the pandemic and need an economic boost; and policies for reskilling and re-engaging employees to counter the ‘great resignation' movement.

Time for a policy reset

The focus should be on entrepreneurial engines of growth — such as family businesses and other privately owned companies — with incentives that encourage their continued investment in innovation. Their growth is expected to contribute to the tax base and help to sustain the world’s economies over the long term.

Focusing on the future and fueling growth

Amidst the uncertainty of the current economic and social environment, governments across the world are facing yet another challenge: how to close the gap on the pandemic debt that has been accumulated. Under similar urgent circumstances in the past, policymakers often turned their attention to taxation as one option for restoring their treasury’s coffers.

The question is, where do governments go from here to tackle their accumulated debt and begin to refill their treasury’s coffers?

As tax professionals, we don’t believe that the world can, in fact, tax its way out of debt. It’s our view that the best way forward is to put energy back into the economy to fuel growth; to focus on the future with incentives that encourage innovation, R&D, green energy and other essential priorities that can help to bring people back to work and boost productivity.

Mike Linter
Global Head of KPMG Private Enterprise Tax, Tax & Legal
KPMG International, Partner, KPMG in the UK

One topic that has stirred public and media interest is the potential for wealth tax increases and so-called “windfall” taxes for companies that performed well during the pandemic. However, we believe that the economic resilience in most countries (which came as a surprise to many) has shifted most of the attention away from talk of taxation and towards stimulating growth.

The goal is to energize the economy. I don’t think you get there through taxes. You get there by incenting businesses to make capital expenditure investments that spur economic growth and recovery. The US central banks are already doing that by maintaining interest rates at extremely low levels to encourage borrowing and home ownership. And the US Federal Reserve has announced that it won’t be raising interest rates until sometime in 2022. In my view, these types of policy decisions are heading in the right direction.

Brad Sprong
KPMG Private Enterprise National Tax Leader,
KPMG in the US


Putting energy back into the economy

As they see their economies beginning to improve, there is more of an impetus for governments to support and re-energize the companies that are helping to stimulate the economy through much-needed jobs, products and services and continuing to fulfill their personal and business tax commitments. The focus should be growth and competitiveness, and measures to promote them should figure prominently in government policies going forward.

Why wouldn’t governments want to tailor some of their economic and tax policies to sustain and expand the impact and important contributions of privately owned companies and agile family businesses? 

Could the large private companies deliver even more value with incentives that allowed them to scale faster and expand their operations more broadly?

"The Australia government is very pro-business; the sense is that sustaining economic momentum is the best pathway forward. As a result, the narrative in the country is not around higher taxes. If anything, there are some new ideas floating around about actually lowering the tax rates to stimulate demand."

Brent Murphy
KPMG Private Enterprise Tax Partner,
KPMG Australia


Our proposition: Four targeted policy building blocks

What are policy makers to do?

In our view, there has never been a better time for governments to shift their policy focus and take into account the current and future contributions of private companies — not only as a response to the impact of COVID-19, but as the way forward in keeping the world’s economies vibrant.

We are proposing four targeted policy building-blocks for governments to consider: segments, sectors, regions and people.

Why focus on segments?

Private companies put their own assets on the line and represent a unique segment of businesses across the world. They take risks, invest in and manage their businesses primarily through their own assets, and when they make decisions they do so with the long-term interests, protection and stability of their businesses in mind. This clearly sets them apart from most other business types.

They “punch above their weight”  in generating economic prosperity, stimulating employment, supporting their communities and contributing their fair share in social security and corporate taxes. Fueling their growth would be a highly effective government policy route for encouraging innovation, responsible growth and long-term sustainability around the world.

As a policy building block, if governments widen their lens and recognize and support the contributions that private companies are already making, they have an opportunity to put the right policies in place to support them and encourage them to grow.

Sector-specific targets

Another immediate area of focus for governments to consider is to target specific policies on sectors that have been particularly hard-hit during the pandemic and continue to struggle. If tax and R&D incentives were focused more on those sectors, we believe that it would ultimately help improve productivity and the overall strength of the economy.

Broad-based tax measures that cater to everyone, especially companies that are already doing well, will likely be less effective. With more narrowly focused support and assistance to private companies in sectors such as travel, tourism, healthcare and hospitality, there could be important incentives that encourage consumers to spend, with every purchase helping to amplify the support for the business and the impact it has on the local and national economy. 

Leveling up through regional development

One of the current debates relates to potential “leveling up” agendas in regions outside the core cities of many countries. London, for example, has been so financially dominant that many regions in the UK have found it difficult to remain economically viable. The same is true in many regions of the world.

The question is, why are more tax policies not designed on a regional basis to stimulate practical business development and growth? Should the tax system be federated to stimulate growth in areas that have been left behind in post-industrialization? This is where agile, entrepreneurial companies, such as family businesses, could be attracted to invest in and build their businesses locally with the right kind of regional economic policies.

In Canada, as in many other countries, the provinces and territories have the ability to attend to their own regional fiscal policies, though they are generally aligned with federal government policies. Historically, for example, there hasn’t been significant differences in tax policies at the regional level. Continued alignment could support businesses and workers across the country more equitably, inspire the creation of new businesses outside the core centers and enhance overall economic growth.

Dino Infanti
KPMG Private Enterprise National Tax Leader and Partner
KPMG in Canada

People and jobs

Despite what appears to be an intense focus on job creation in many countries, the media has picked up on a new trend — the “great resignation” — which appears to be one more outcome of the pandemic. Millions of workers worldwide are leaving their jobs and, so far, they don’t appear to be coming back. This is one of the most serious issues confronting many businesses today.

As a result, we see the focus is shifting from “job creation” to finding ways to keep employees and “fill” the jobs that are already there. This is a particularly concerning issue for companies and industries that are still grappling with the pandemic’s damaging impact on their businesses.

We believe there are some important potential policy initiatives that could be considered in this environment, such as reskilling programs for employees and re-engaging them through employee participation plans — especially in startups and scaleups where employees can ‘own’ a piece of an exciting entrepreneurial business.

Though it can be complex to give employees equity participation, there is the potential for governments to introduce mechanisms that can encourage and enable the introduction of appropriate employee ownership schemes that can help to attract, engage and retain key employees in privately owned companies.

The link between ownership and productivity is a really important one, and previous studies have shown that higher productivity levels are achieved in businesses that have some form of employee participation.

The way forward

Going forward, it is our view that the focus should not be on imposing higher tax rates — especially on entrepreneurial engines of growth such a family businesses and other privately owned companies — but on incentives that encourage their continued investment in innovation. It’s the growth and profitability of these businesses that can contribute to the tax base and help to sustain the world’s economies over the long term.

The impetus from the government is to help businesses grow and thrive. The Singapore government is providing a lot of tax incentives and grants for organizations that invest in R&D, science and healthcare. This is a very small country, but the people here are very good consolidators as many good ideas from all over the world are brought together. This is how to help continue to innovate, grow, prosper and compete.

Wu Hong Chiu
KPMG Private Enterprise Tax Partner
KPMG in Singapore

As we move to a more global tax approach for large multinationals, it would make sense for governments to recognize the importance of private companies through tax systems and economic policies that encourage their growth from a sector, regional and innovation perspective.

Despite the stability that these companies can bring to their local and national economies, few jurisdictions thus far have taken this more targeted segment, sector and regional approach.

We believe this is an opportune time for governments to adopt an entrepreneurial mindset with policies and legislation that recognize the contributions made by private companies on their local, regional and national economies.

We welcome your thoughts on the propositions we’re putting forward and other issues and opportunities that you believe are important to consider. We want to hear your views. We encourage you to contact our local KPMG Private Enterprise Tax professional.


Throughout this website, “we”, “KPMG”, “us” and “our” refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity.



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