The concept of the circular economy is becoming increasingly prevalent in discussions around supply chains, sustainability and geopolitical challenges. As the circular economy agenda seeks to reduce waste and reduce raw materials inputs in all stages of the system, businesses will have to holistically manage all parts of their production and supply chain.
More broadly, business tax leaders are asking how the circular economy might fit with potential taxation developments. What has occurred to date and what might we see ‘around the corner’? What potential tax levers are out there? What impacts might they have on our business?
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What is the circular economy?
Proponents of the circular economy argue that the traditional economic system of production is a linear economic model. This model operates under the principles of ‘Take, Make, and Waste’ and does not have sufficient regard for the limitation of the globe’s resources.
A circular economy approach is said to involve the following three key principles:
- Design out waste and pollution
- Keep products and materials in use
- Regenerate natural systems
Key insights
How KPMG professionals can assist in this process
There are four key areas where KPMG professionals can assist businesses in embracing the circular economy. These are:
- ESG specialists who can identify government initiatives that impact the circular economy including determination of the carbon footprint for an organization
- Supply chain specialists who can consider the role of supply chain both for specific businesses and as a broader component of supply chain
- R&D and grant specialists who have experience with grants and concessions globally
- Tax specialists who can assist when considering environmental taxes and tax aspects of the circular economy