Navigation Links
KPMG Survey: Medical Device Execs Say New Excise Tax Will Hit Their Company Bottom Lines Hard

NEW YORK, April 18, 2012 /PRNewswire/ -- Financial executives in the medical device manufacturing industry predict that a new excise tax and the burden of its related compliance costs will have a negative impact on their company bottom lines, according to a survey conducted by KPMG LLP, the audit, tax and advisory firm.  Forty percent of respondents said their companies are already contemplating actions such as price increases and cost reductions -- headcount, manufacturing processes, or other means -- to stay competitive.

As part of the Health Care and Education Reconciliation Act of 2010, health care providers who manufacture or import medical devices or equipment for sale in the United States may be subject to a 2.3 percent excise tax.  The Internal Revenue Service and the U.S. Department of the Treasury issued proposed regulations pertaining to the tax in February.

In the KPMG survey, almost two-thirds (61 percent) of the 190 financial executives from the medical device manufacturing industry said the excise tax will negatively affect their company's bottom line, and 60 percent believe it will increase their company's tax compliance costs.  Fifty-five percent of respondents also expect that it will be difficult for their company to comply with the excise tax, citing confusion over which products will be taxable and challenges in implementing systems for compliance (both 16 percent) as key issues.

Determining the tax base for each taxable device (15 percent) and developing an implementation plan and determining the necessary resources required (13 percent) were also cited as expected compliance hurdles by respondents.

"Manufacturers and importers of medical devices have a great deal of work to do in order to prepare to begin reporting the tax, which is effective for sales on and after the January 1, 2013 effective date and applies to their sales of taxable medical devices in the United States," said Frank Mattei, national tax leader of KPMG's Pharmaceutical and Medical Device practice.  "Companies will need to become familiar with the excise tax rules, identify their affected entities and products, and develop the appropriate compliance processes.  A 'gap' analysis should be conducted as soon as possible to identify areas that need to be addressed."

The KPMG survey also reveals that, in response to the tax, many medical device industry companies are already considering actions that they believe will help them stay competitive.  Twenty-two percent of respondents said their companies would most likely consider increasing the cost of goods sold to the purchaser, while 13 percent said their organizations would most likely consider making cost reductions in areas such as headcount and manufacturing processes.  Fifty percent said they were unsure about the actions their company might take.

Thirty-five percent of respondents to the KPMG survey said their company is currently working across several departments to prepare for the implementation of the excise tax regime.  Nine percent said steps were being taken to prepare for the implementation within the tax department only, while 30 percent said they were not taking any steps to prepare because they were either still trying to understand the implications or evaluate their options.

"Companies need to work across various functions to prepare for effective compliance, because this is not just a tax issue," said Adam Uttley, a KPMG tax partner focused on accounting methods, credits, and special projects.  "Finance and tax departments will need to work with their IT, operations, and regulatory counterparts, while keeping leadership informed of issues that could affect the business.

"Although many may still be hoping for legislative relief, it would be prudent to assume that a first deposit of medical device excise tax will be due by January 29, 2013, and the first quarterly federal excise tax return will be due by April 30, 2013," Uttley added.

The KPMG survey was conducted in March during a KPMG Tax practice-sponsored event focused on the impact of the medical device excise tax. 


KPMG LLP, the audit, tax and advisory firm (, is the U.S. member firm of KPMG International Cooperative ("KPMG International").  KPMG International's member firms have 145,000 people, including more than 8,000 partners, in 152 countries. 

Contact: Ichiro Kawasaki/Laura Sheridan Powers
Tel: 201-307-8640 / 212-872 7665
Email: /

Copyright©2010 PR Newswire.
All rights reserved

Related medicine technology :

1. Alzheimers Foundation of America Survey: Americans With Memory Concerns Fall Short of Talking to Doctors
2. National Foundation for Infectious Diseases (NFID) Survey: Parents More Flu Aware and More Likely to Get Kids Vaccinated
3. New Survey: Walgreens Customers Flock to Independent Pharmacies
4. Harvard Medical School-Partners HealthCare Center for Genetics and Genomics Successfully Completes Evaluation of AutoGenomics 2C9-VKORC1 Panel to Assess Warfarin Sensitivity
5. You May Have a Thyroid Problem and Not Know It - Particularly If Youre Over 60, Says a New Harvard Medical School Report
6. Harvard Medical School-Partners HealthCare Center for Genetics and Genomics Successfully Completes Evaluation of AutoGenomics 2C9-VKORC1 Panel to Assess Warfarin Sensitivity
7. Globus Medical Raises $110 Million in Series E Financing Round
8. Quark Pharmaceuticals Appoints New Chief Medical Officer
9. Boston University Biomedical Engineers Find Chink in Bacterias Armor
10. Rochester Medical Anti-Infection Foley Catheter Demonstrates Effectiveness in Randomized Trial
11. Rockwell Medical Technologies, Inc. Begins Patient Enrollment for its SFP Dose-Ranging Study
Post Your Comments:
(Date:11/30/2015)... iCAD, Inc. (Nasdaq: ICAD ) ... solutions for advanced image analysis and workflow tools ... Radiological Society of North American (RSNA) 2015 Annual ... November 29 to December 4, 2015. The company ... automated breast density assessment solution, PowerLook® Advanced Mammography ...
(Date:11/30/2015)... SALT LAKE CITY , Nov. 30, 2015 ... Systems (NYSE: VAR ) will exhibit a broader array ... meeting of the Radiological Society of North America ... The Varian exhibit at the meeting will feature X-ray components ... Cardinal CT tube, a line of products from Varian,s Claymount ...
(Date:11/30/2015)... Nov. 30, 2015  Novartis will demonstrate the strength ... th American Society of Hematology (ASH) Annual Meeting. ... as well as supportive care, including key findings in ... cell therapies. The ASH Annual Meeting will be held ... Novartis Oncology . "We will be presenting ...
Breaking Medicine Technology:
(Date:11/30/2015)... (PRWEB) , ... November 30, ... ... (AIS) is pleased to announce the speakers for “Value-Based Payer-Provider Partnerships: Three ... learned from three innovative value-based care arrangements: Essentia Health and UCare, MissionPoint ...
(Date:11/30/2015)... ... November 30, 2015 , ... Vasont Systems, a top component ... (VUI) extension unites with Syncro Soft’s latest software update, oXygen XML editor Version ... with the latest release of oXygen® XML editor and the Vasont® CCMS. ...
(Date:11/30/2015)... ... November 30, 2015 , ... Scott Newman MD, FACS ... select few plastic surgeons in the New York City area to utilize the ... world’s first heat-induced laser treatment for fat loss in the abdomen, flanks, and ...
(Date:11/30/2015)... ... November 30, 2015 , ... TransPack Volume 6 features 30 customizable ... from scrolling web-styled transitions to wipes with blur & drop shadow options. Utilize ... Seamlessly transition from one clip to the next with TransPack's easily customizable styles. ...
(Date:11/30/2015)... ... November 30, 2015 , ... ... strategic partnership at the Radiological Society of North America (RSNA) 2015 conference. ... providers of cutting-edge dictation and speech-enabled documentation software, announced their partnership today ...
Breaking Medicine News(10 mins):