Student conference presentation about the career opportunities that exist in the tax and law profession

1. The role of the tax professional
in an ever increasing confrontational environment
Student Conference
Sun City South Africa
James Deiotte
February 15, 2013

2. Slide 2
Who said this?
“The hardest thing in
the world to understand
is the income tax.”

3. Slide 3
Answer – even he was said to be confused

4. Slide 4
Your role – in an ever increasing
confrontational environment
► Requires that you understand you craft as a tax
professional
► Requires that you understand your environment
► Legislative and regulatory agendas
► Requires that you be able to communicate to an ever
widening constituency in the future
► Requires that you understand your role

5. Slide 5
UNDERSTAND YOUR CRAFT
Keys to your success

6. Slide 6
Tax planning – 101
(at one level it is pretty simple)
Tax Law
Tax Results
=
+Your facts

7. Slide 7
Planning – Focused on the Law
1. Eliminate Tax (Tax Free Transactions)
2. Deferrals of Tax (installment; amalgamations; swaps,
etc.)
3. Changes in the Rate of Tax
4. Change the Character of Income/Expense
5. Global tax planning (maybe the hottest topic on the
planet)
Some of the tools of the Government
• Disclosure requirements

8. Slide 8
Planning – Focused on the Facts
1. Characterization of income or expense
2. Business case
3. Unwinding a transaction (e.g. mistake, rescission vs
fraud)
4. Agreement of the Parties
Some of the tools of the Government
• Substance over form
• Economic effect or substance

9. Slide 9
UNDERSTAND THE
ENVIRONMENT
Keys to your success

10. Slide 10
Landscape is changing faster than ever
Tax implications
Shifting
economy
Aggressive tax
enforcement
Pace of
globalization
What is the
most tax-efficient
structure for new
investments?
Legislative
and regulatory
change
Change drivers
Key questions for businesses

How do we
accelerate and
mobilize cash in a
tax-efficient way?
What are the risks
in jurisdictions
where we are
seeing increased
audit activity?
Are there
impending
policy decisions
that affect our tax
positions and
return
calculations?

11. Slide 11
A Foundation for Built In Complexity and
Challenge
REGULATORY
BODIES
INTERPRET
AND
MANAGE LAW
POLITICAL PROCESS
IDEA TO CHANGE
THE
TAX LAW
IS
BORN
Judicial
Challenges
Occur
Multiple
Jurisdictions
Involved
Complex
Organizations
Are under
Stress
Financial
Products
outpace
Laws

12. Slide 12
Political Winds
When I Started in this Profession … this quote was used most often…to
frame what we do…
“Anyone may arrange his affairs so that his taxes shall be as low as
possible; he is not bound to choose that pattern which best pays the
treasury. There is not even a patriotic duty to increase one's taxes. Over
and over again the Courts have said that there is nothing sinister in so
arranging affairs as to keep taxes as low as possible. Every one does it,
rich and poor alike and all do right, for nobody owes any public duty to
pay more than the law demands."
by: Judge Learned Hand
(1872-1961), Judge, U. S. Court of Appeals
Source: in the case of Gregory v. Helvering 69 F.2d 809, 810 (2d Cir. 1934), aff'd, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed.
596 (1935)

13. Slide 13
Political Winds – apparently the same
thoughts were shared in South Africa
See the quote from the Supreme Court of Appeal - COMMISSIONER
FOR INLAND REVENUE v CONHAGE (PTY) LTD 61 SATC 391
HEFER JA: [1] Within the bounds of any anti-avoidance provisions in the relevant
legislation, a taxpayer may minimise his tax liability by arranging his affairs in a suitable
manner. If eg the same commercial result can be achieved in different ways, he may enter
into the type of transaction which does not attract tax or attracts less tax. But, when it
comes to considering whether by doing so he has succeeded in avoiding or reducing the
tax, the court will give effect to the true nature and substance of the transaction and will not
be deceived by its form (Erf 3183/1 Ladysmith (Pty) Ltd and Another v Commissioner for
Inland Revenue 1996 (3) SA 942 (A) at 950I-952C).

14. Slide 14
Legislative Outlook – perceptions can create
responses

15. Slide 15
And they responded – with disclosures and
enhanced penalty regimes

16. Slide 16
COMMUNICATE TO AN EVER
WIDENING CONSTITUENCY IN THE
FUTURE
Keys to your success

17. Slide 17
Tax is under a microscope as never before
•CEOs
•Boards of Directors
•Owners
•Employees
•Representatives
•Community
•Customers
•Tax authorities….
and those around the world

18. Slide 18
Here is why
Do tax professionals require public relations training and skills?
“Using
legal
loopholes”
“Aggressive
Schemes”

19. Slide 19
How would you handle these?
► We know we can influence how some people behave through publicity, which
can lead to an increase in voluntary compliance…
HM Revenue & Customs Issues Briefing (Nov 12)
► London Mayor Boris Johnson on Sunday defending companies, such as
Starbuck, for seeing to minimize the level of tax they paid in the UK. … he
said “imagine that you are the corporate finance director of one of these
companies… Your fiduciary duty to your shareholders is to minimize your tax
exposure
BBC News Business (9 December 2012)
► The threat of a huge boycott by customers forced coffee giant Starbucks into
paying tax in the UK…
Mail Online (2 December 2012)
► SABMiller… set up a special limited company … to manage it brand rights.
Royalties in some countries can be taxed at up to 30%. However, in the
Netherlands, advance deals with the tax office mean income royalties are
taxed in some cases at 7%...
Dutchnews.nl (15 November 2012)

20. Slide 20
How would you handle this?
If you are a multinational you will be able to reduce
your taxes substantially because the international
tax architecture is completely out of date, OECD tax
policy director Pascal Saint-Amans
Business Day (13 February 2013)

21. Slide 21
UNDERSTAND YOUR ROLE
Keys to your success

22. Slide 22
First – understand your keys to success
► Focus on your development
► Obtain diversified work experiences
► Continuously read and study – graduation is your minimum requirement for the
profession
► Identify role models and work with them
► Hang out with tax people often – but hang out with other business persons as well
► Understand that our roles become more valuable
► When taxes increase
► When changes might or will take place
► Don’t get lazy – this profession will humble you.
► Years of Experience – Will differentiate you in the marketplace
► Years of Experience – Can easily be erased with a few legislative changes
“We All Must Stay Current”

23. Slide 23
Keys to your success (cont)
► Tax professionals yesterday –
► Most common skills possessed by tax professionals accounting, tax, law and
economics
► Tomorrow
► Understanding the importance of becoming a well rounded (and connected) tax
professional
► General business acumen and knowledge will be key to success.
► Consider the need or relevance of second majors (economics, finance,
supplychain/procurement, political science/law, information systems)
► Appreciate the importance of a global mindset for multi-jurisdictional teaming and
planning (culture/inclusiveness training, language, etc.)
► IT/HR/Creative services/Technologies support

24. Slide 24
Second – Appreciate how COOL you really
are?
Your very cool – you just don’t know it yet!
► You know you are cool when
► Your families and friends will actively seek your advise…
► Your future in laws love to see you – especially at tax time
► You are always the last person to sign off on everything
► Your services are easy to sell – because everybody wants
tax advise
► We save you cash (including interest and penalties)
► We keep people out of trouble (including criminal sanctions)

25. Slide 25
Long term outlook of a career in tax
– very good
► Sharing of information by agencies (domestic and global)
► Playbooks and approaches to audits are being shared
► Enhanced regulatory oversight
► Uncertain tax position reporting
► Economic substance codified into law and increased strict liability
regimes
► Increasing of the tax base
► Rates, rules, regimes
► Opportunities expanding
► Incentives/controversy
► Complexities around operate models and supply chain
► Simplification – WILL NEVER HAPPEN

26. Slide 26
Thank you
Final Thoughts and Questions

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