Report: Defense Companies Paying Less in Taxes

Courtesy PwC

Courtesy PwC

A new report from PwC that tracks the effective tax rates (ETR) for various industries shows a nearly three percent drop from 2012 to 2013 for aerospace and defense companies.  With revenues down, that means defense companies are not only paying a lower rate, but are forking over less total money to their governments.

The report analyzed results from 48 companies, finding that the ETR had gone up from 2011 to 2012 by an average 1.6 percent, only to fall 2.7 percent in 2013 to 26 percent. The 2013 figure is 1.1 percent below the 2011 total.

PwC attributed the drop to R&D credits that were carved out as part of American Taxpayer Relief Act of 2012, passed in January 2013.

That law carved out credits for 2012 and 2013.

“Many companies recognized R&D credits relating to 2012 in 2013, giving rise to the down­ward trend line for that year,” the report said. “The R&D credits have not been extended into 2014, although there is bipartisan Congressional support to do so.”

Of the 48 companies, 34 were US-based and 14 were based overseas. The US companies had a heftier tax bill from 2011-2013 at an average of 29.4 percent compared to 19.3 percent for their non-US peers.

The full report can be found here.

Zachary Fryer-Biggs
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Zachary Fryer-Biggs

Senior Staff Writer at Defense News
Zach is the State Department correspondent, cyberwarfare, research & development and business reporter for Defense News.
Zachary Fryer-Biggs
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