Medical Device Importers, Users See Big Downside to Excise Tax, KPMG Survey Shows
A new excise tax on the import or manufacture of medical devices or equipment, and the burden of its related compliance costs, will have a negative impact on medical device manufacturing companies' bottom lines, according to a survey conducted by tax firm KPMG.
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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 U.S. may be subject to a 2.3 percent excise tax. KPMG said the survey showed 61 percent of respondents said the excise tax will hurt their company's bottom line, and 60 percent believe it will increase their 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).
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.