More than just a one-hat phony: The many roles of tax consultant

18.1.2016 | Petteri Rapo

More than just a one-hat phony: The many roles of a tax consultant

When listing out the most respected professions, being a consultant – especially a tax consultant – likely still falls somewhere between a grave digger and garbage truck driver (both of which, by the way, are essential parts of a well-functioning society), and far behind the doctors and firefighters that top the list. And even though mentioning working with taxes as the primary way of earning your daily bread might not result in admiring looks or (positive) attention from the opposite sex during the Friday after-work at a local bar, the industry is doing well and the total number of tax consultants is steadily increasing.

While the analysis on the exact reasons for the rise of the tax consulting business as a whole deserves a dedicated post of its own.

One of the major reasons for its appeal among law and business graduates is surely the versatile nature of engagements and the ever-expanding variety of different roles that consultants find themselves in.

And while the exact details of the job description, as in any service business, are eventually determined by the employing organization and further characterized by the individual carrying out the daily activities, every tax consultant is likely to hold the following roles – if not on a daily basis, then at least at some point in their career:

The Kingmaker

As one of my professors at the Helsinki School of Business (nowadays better known as the Aalto University School of Business) used to say, the best consultants are like high-quality sponges: absorbing anything and everything around them. In a less abstract description, consultants learn a lot from working with different engagements and companies from a diverse range of industries. The understanding and best practices accrued this way are then applied to new projects, enabling the client to benefit from the condensed and refined knowledge that the consultant is possessing.

The Equalizer

A not-so-widely discussed flipside of using a consultant is the aftermath of such spreading of best practices and knowledge across industries and companies: the eventual loss of a competitive advantage. Even though the OECD’s BEPS project and the recent State Aid investigations conducted by the European Commission aim at diminishing the role of taxes (or lack of them) as one source of competitive advantages, it goes without saying that skilled tax planning and innovative tax schemes have contributed to the success of many multinational corporations over the past few decades.

However, once the same great ideas have circulated among all of the major players by hardworking consultants, no relative competitive advantage remains. The same goes for the more practical benefits: once everyone has implemented the same best practice, it is downgraded to just an ordinary practice.

The Facilitator

As the worn-out saying goes, “the only thing constant in life is change”. This is also true for modern organizations where career development often involves horizontal moves, resulting in a moment of confusion and standstill before the replacement is hired. This is often where long-term cooperation relationships come into play: an experienced consultant may facilitate a smooth transition by bringing the new in-house hire up to speed and even, if necessary, keep the crucial compliance processes in motion during the transition period.

The Archive

As consulting firms have their own built-in systems to store information and maintain a constant level of understanding with respect of the client’s business, no matter what – holiday season or not – a trusted advisor may therefore act as a sort of log book with respect to past plans and activities within the organization. So therefore, even though a tax consultant may not know where you parked your car or put your home keys last night, they might have an idea why that Polish subsidiary has such a robust balance sheet and why any changes should be carefully considered.

The Translator

Even though English is the language of international corporate taxation, the terminology used, especially in transfer pricing cases, often differs from the day-to-day business language. Many familiar terms may also have a very different meaning in the world of taxation. Therefore, consultants often act as translators for the local tax authorities, aiming to explain the fundamentals of the underlying business by using the often very specialized jargon. Or does “fully-fledged title-taking distribution entity” sound like an obvious and self-evident reference to your Swedish subsidiary?

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Even though a rapid increase in appreciation for the (tax) consulting business among the public is not in sight, taxes share the same fundamental feature with death and garbage: they have been, are and will always be an integral part of the everyday (business) life. Therefore, it is the duty and responsibility of each and every consultant to play the required roles to the best of their ability and keep in mind their unique ability of bringing added value to the table. This is of utmost importance, as only a happy client can do something that everyone else may struggle with: say nice things about a tax consultant.

This is of utmost importance, as only a happy client can do something that everyone else may struggle with: say nice things about a tax consultant.

The writer works as a partner and experienced professional in our Transfer Pricing Services, specializing in challenging transfer pricing assignments. 

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