Working as a tax consultant in a Big 4

Ever since I have started working in KPMG Tax back in September 2018, I’ve gotten quite a fair bit of questions from my learned friends of legal background about working how is it like working in a professional service firm as opposed to working in a law firm.

Joined with me in this write-up for the first ever joint blog post is Tan Ai Jin who works at Deloitte as a tax consultant as well. Ai Jin and I are both law graduates who are currently pursuing the commercial route but the difference is that Ai Jin is in the Transfer Pricing whereas I am in Corporate Tax.

Disclaimer: The views and opinions expressed in this post are personal and those of the authors and the authors only. They do not in any way reflect the views and opinions of the people, institutions or organizations that the authors may or may not be associated with in a professional or personal capacity.

  1. Aren’t you a lawyer? Why are you working there?

Sophia (KPMG, Corporate Tax): I think Ai Jin and myself are in agreement that this is the most asked question during our first few weeks in office. I think I am the only non-accounting graduate on my whole floor.

The reason behind why I’ve decided to work here is very much driven by a personal desire to explore other career opportunities beyond the Bar Granted this practice may not be as commonplace in Malaysia, there is an upward trend in this practice with an increasing amount of my friends taking a go in a professional service firm. (Also because I was precluded from taking the CLP exam due to a misunderstanding about LSE’s course structure.)

Ai Jin (Deloitte, Transfer Pricing): My first exposure to tax was a module I took in my final year of university which touched on tax evasion and avoidance. I was quite drawn to the subject and was keen to learn more, given I have no prior knowledge of tax, which led me to choose tax as my assignment topic. This was exciting for me because I enjoyed the process of learning something completely new, particularly after 2 years of more traditional law modules.

From my research, I read quite a bit that people who work in the field of tax often have a law background. Having not much interest to continue with the BPTC, I considered the option of furthering my learning of tax through a Masters but decided I would need work experience first.

2. Do you have any prior experience in Tax?

Sophia (KPMG, Corporate Tax): My personal experience of working in tax dates back to July 2015 when I interned in Tax Department in Lee Hishammuddin Allen & Gledhill. I took a tax module and an accounting module in my degree so that really helped a lot. Upon graduation, I interned in the PwC Malaysia under Tax Reporting Strategy.

Ai Jin (Deloitte, Transfer Pricing): In my final year of university in the UK, I had a brief stint volunteering for a lady who inherited a cottage and wanted to utilise it as temporary housing for refugees. Mine and the other volunteer’s role was to research for tax implications and the feasibility of running her idea as a charity or business. I guess this helped cement my impression of tax and gave me confidence that there is a place for law graduates in tax.

3. So, what do you do as a Tax Consultant?

Sophia (KPMG, Corporate Tax): For easy reference, I shall insert an excerpt from the KPMG careers website:

The Corporate tax department is separated into 2 indistinct groups: Tax compliance and Tax advisory. Why I say “indistinct” is because you’ll end up doing both. However, most likely than not, you will be doing the work of either one group more than the other. For me, I hold a dual portfolio of being in both Tax compliance and Tax advisory in Corporate Tax.

Tax Compliance: Part of my day-to-day routine involves the computation of the company’s tax returns. Filing of tax returns requires constant referral to the Income Tax Act, have a strong foundation of the rules of deductibility of expenses and claiming tax incentives adequately.

Another bulk of work of my tax compliance is reflected under point 2 and 3 which relate to managing our corporate client’s tax affairs. Depending on the size and the business of the company, there are various issues you might need to iron out with the Malaysian Inland Revenue Board (MIRB) such as the return of overpayment of taxes of the clients, enquiry of the tax affairs as well as other queries and unclear points of law.

I would say that tax compliance work is quite individualistic because each consultant is responsible for their own client listing. The only person responsible for you is the Manager-In-Charge for the client. There is a senior for guidance but you are expected to be independent, know what you need to know and do what you need to do.

Tax Advisory: As for Tax Advisory, my work is pretty ad-hoc because it depends as and when I am required to assist. To put it simply (and to prevent infringing any rules of confidentiality with KPMG), it is to inform clients about the tax implications of any corporate restructuring, due diligence, M&A or other exercises they intend to undertake. For example, if a German company intends to set up a company in Malaysia, we can help in informing the various tax incentives in Malaysia available for that industry or we can also brief them on what happens if they intend to take over a Malaysian company and conduct a due diligence exercise.

Ai Jin (Deloitte, Transfer Pricing): Without getting too technical, the bulk of my task involves drafting transfer pricing reports for companies which fulfil the revenue and related party transaction threshold. (For more information on related party transactions, read up on Sophia’s post about it here.) The report need not be submitted with the tax return but should be available upon IRB’s request.

I see the transfer pricing report as a ‘health check’ of sorts. It contains details of the holding company, description of the company’s business nature and the purpose each function serves within the company in relation to their controlled transactions, and the risk assumed by the functions. We then use transfer pricing methods to assess the company’s profit margins and benchmark it against comparable companies. This process involves a lot of information exchange between the client as we need to thoroughly understand the company’s business to draft a comprehensive report.

When the company is making a loss and their profit margins do not mark up to the comparable companies, it could lead to being selected by IRB for audit. We generate margin analysis to justify the company’s result, which could be due to various reasons, ie. fluctuating market conditions, expansion of business, or one-off extraordinary losses. The audit process is arduous and has high stakes because if either party is unsatisfied with the outcome, it could mean settling the case in court which is far more taxing (pun intended).

There are areas of transfer pricing like Country-by-Country Reporting, Master File and transfer pricing disputes which are covered under Advanced Pricing Agreement and Mutual Agreement Procedures as well.

4. What are some distinct points of your work that is only found in your company?

Sophia (KPMG, Corporate Tax): For one, KPMG is next to 1 Utama which is a big plus when it comes to deciding what to have for lunch. Secondly, parking is relatively cheaper. Thirdly, and on a more serious note, KPMG does a lot of classroom training which entails a great deal of personal interaction and adequately prepare employees to perform more confidently. I had a month half training before I actually started doing any work. We also have very regular updates whenever different matters arise i.e. National Budget, Tax Townhall, changes in Tax treatment and others.

Ai Jin (Deloitte, Transfer Pricing): I appreciate the diversity of the workforce in the company. Just my department alone, we have different Service Groups to cater to specific markets ie. Japan, Korea, and China Service Groups respectively have a native speaker to manage the cases and facilitate our communication with the clients. I belong in the Japan Service Group and was able to handle cases involving Japanese conglomerates which is quite a unique market.

Adding to the diversity, we also have more than 8 different nationalities in the department to share their expertise and tasty treats from their respective hometowns!

5. Lastly, do you enjoy doing what you’re doing?

Sophia (KPMG, Corporate Tax): During my past 6 months stint, I can say with conviction that I’ve learnt a lot in my time at as it had kindly offered me a clearer picture of a tax consultant job to help me with my future career choices. I’m sure millennials will be entering that quarter life crisis where you’re unsure of what you want to do and don’t know if you’re going to continue. I’d say give it a shot because you’ll never know it until you try it.

Granted it is (very) difficult to be working with many amazing talents and severely lacking on the relevant skills and knowledge as the person beside me, it gives you that added advantage of being able to learn at expedited speed because if you’re the smartest person in the room, you’re obviously in the wrong room.

Ai Jin (Deloitte, Transfer Pricing): I think I have a long way to go before I can be completely confident and satisfied with my experience. It is especially difficult having to pick up accounting principles as I carry out the job without any (I mean zero, zilch, I didn’t even take accounting for SPM) foundation on accounting and finance. I also felt a bit alone in my struggles compared to my peers who are chambering and getting to practise what they learned in law school. Getting to meet people like Sophia in a similar predicament was really inspiring and encouraging.

So I always tell myself I’m in this path with a reason and will continue to stay in it for as long as I can go. Besides, I enjoy challenging myself outside my comfort zone and looking back to appreciate the progress I have made. It’s cheesy but I’ll end with a poem which inspired me:

“So wear your strongest posture now

And see your hardest times

As more than just

The times you fell,

But a range of mountains

You learned to climb.”

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