TAX LAW: A GOOD TIME TO BUILD YOUR UNDERSTANDING OF IT
With more tax cases on the horizon, it’s timely for corporate and commercial lawyers to grow their understanding of the practice area, says WongPartnership’s Tan Kay Kheng.
Hindsight truly is 20/20; for decades, commercial legal work has always included elements of tax, making the need for a tax team a no-brainer for law firms majoring in corporate and commercial work. But up until the 1990s, most clients would be redirected to accounting firms whenever tax advice was sought. That began to shift so that by the early 2000s, major firms began introducing dedicated tax practices, in a bid to become “one-stop” advisors to clients.
At WongPartnership, its tax department was pioneered by Mr Tan Kay Kheng, who combined time in private practice with actual tax work experience at the Inland Revenue Authority of Singapore. His academic credentials also made him an obvious choice to lead the team, given that he holds both a master of accountancy and a master of taxation.
Mr Tan’s interest in and fondness for numbers make him a rare breed in the legal community. But he points out that perhaps far too many commercial lawyers are on the other extreme and only too happy to let the accountants advise on tax matters. He chuckles when I tell him that he has basically echoed a comment made by fellow tax practitioner, Ms Ong Ken Loon of Drew & Napier earlier this year. “It’s true to some extent: many commercial lawyers may miss out the tax issues in their client matters unless they are alert enough to look out for them.”
As an example, he cites common commercial transactions like the issuance of bonds or those involving real estate. “Those at my firm have had the benefit of a tax practice for many years; so are attuned to both the tax issues, as well as the need to look out for them,” he explains. “Because without those interactions with a tax practice, you might just miss those issues.” He adds quickly that this can similarly be the case with other areas of the law. “But there’s a certain mental block that lawyers commonly seem to have when it comes to tax,” he quips.
Like Mr Tan alluded to, that alertness to tax issues is developed through active engagement with tax lawyers. This would include also an understanding of the cases that have made it to the courts. There has been an uptick in the numbers of these cases, especially as companies are more willing to challenge the tax man’s assessments and decisions. This circles back to the importance of corporate and commercial lawyers understanding tax issues, as a means of better serving their existing client pool and engaging new clients.
To help build the legal community’s understanding of tax issues, Mr Tan will lead next month’s review of the 2019 judgements delivered by the Supreme Court in the field of revenue and tax. His discussion will cater to those wishing to grapple with the issues of tax particularly in commercial law, and also younger tax practitioners. “There will be a 30-minute Q&A session which will be useful for explaining various concepts further to participants,” he concludes.
Registrations for the SAL Annual Review 2019 on Revenue and Tax Law are now open.
TAX TIPS:
1. Don’t be frightened by numbers: “This applies whether you’re a commercial lawyer or a tax practitioner; invariably, the tax issue will be quantified in some way. This is the tax impact. Most of the time, however, you are providing legal advice, not computing tax, which clients will likely get done elsewhere.”
2. Appreciate how tax rules broadly work: “At the very least, a surface understanding will help. Understandably a commercial lawyer wouldn’t want to deep dive into another practice area such as tax; but it’s helpful to know at a high-level how tax works.”
