Law firms grab tax cheese
As China matures its tax system, tax compliance becomes more challenging. Tax planning become essential for businesses and high-net-worth individuals. All this results in a strong demand for professional talent〞experts who advise clients on paying the correct amount, and structuring to legally pay the least.
Most tax professionals in China are accountants. Most tax professionals in China are employed by accounting firms, the Big Four accounting firms in particular. The Big Four accounting firms all employ large teams that include partners and hundreds of other staff involved in tax work.
Tax practice in accounting firms〞particularly in the Big Four〞covers a wide range of tax issues affecting companies and individuals. Because tax practice covers so many areas, professionals may specialize in one or more tax areas.
Law firms grow tax practice
Compared to accounting firms, the number of tax professionals employed by law firms in China is small. This is changing. While there are few law firms with a strong dedicated tax capability in China, many leading law firms are adding tax practice. Some smaller firms are seeking to develop a reputation as boutique tax firms. Most M&A, FDI and other business projects involve tax issues. The tax issues can be critical for some transactions, especially in cross-border projects.
Professionals from law firms and accounting firm often work together on teams to complete investment projects in China. "Rivalry co-exists with cooperation between Big Four and law firms," notes Vivian Jiang, Managing Partner of Eastern Region Tax Practice at Deloitte. Probably, we can expect the "rivalry" to increase as the firms compete in a hot market for tax talent. As major tax service providers, the Big Four recruit and train a big pool of tax professionals. Law firms may look to this large pool to find tax talent. An example of this trend is Peter Ni who recently left Ernst & Young to lead White & Case's international tax practice for China.
Accounting degree a must?
Reviewing the profiles of respected tax lawyers shows that most are well educated in both law and tax. Some tax lawyers first gained their legal education and then proceeded to a Master of Tax degree or LLM in Taxation. Larry Sussman, who leads O'Melveny & Myers's tax practice in Beijing, took this path. Other lawyers first graduated with degrees in accounting, economics or taxation and then went on to gain a law degree. Brendan T. Kelly, with Baker & McKenzie, followed this path.
Most tax professionals have a strong background in accounting.
Tax law changes more frequently than some other legal practice areas. Governments use tax policy as a tool to stimulate or depress parts of a national economy. With so much change, a tax professional must work diligently to keep current. China presents some particular challenges to a tax professional. As China reforms its economy, its tax regulations are evolving and changing. This means more work for busy tax professionals.
Legal mind + business sense
Understanding tax rules, alone, is not enough to be a successful tax lawyer. Business sense is essential. Tax planning must integrate with, and support, the structure and operations of the business. Without a good sense of a client's business〞the accounting, operations and structure〞a tax professional will not be able to provide complete tax support to a client.
Ding Fa, "David Liu," tax partner with Jun He Shanghai office emphasized the importance of a tax lawyer maintaining an "open-minded" approach. He notes that work requirements for tax lawyers in law firms differ from work requirements for a tax professional in a Big Four accounting firm. A tax professional in a Big Four firm will likely work in a group, focusing on a particular area of tax. The work tends to be more specialized and narrow. This is true especially at the start of work in a Big Four firm. A law firm tax professional will typically contribute tax expertise as part of a project team where various legal and tax challenges are presented. It is imperative that a tax lawyer be sensitive to, and take into account, the various legal issues involved in the project.
No one likes to pay taxes, but we cannot escape. A famous American, Benjamin Franklin, once wrote these often quoted words, "In this world nothing can be said to be certain, except death and taxes." If we cannot escape paying taxes, we certainly do not want to pay more than is absolutely necessary. We need tax experts to survive and thrive!
