It is said that two things are certain in life: death and taxes, and while we will eventually get around to interviewing people in the death care industry, for now let’s focus on tax.
Yes, tax—that dreaded bill you pay yearly as a penalty for earning too much. I kid, but sometimes it does feel like that, doesn’t it? To be clear, this article focuses on corporate tax instead of the mentioned personal tax, but I couldn't resist the analogy.
Today we will be looking at a tax manager in a Big 4 firm, which are really the other people you see besides auditors*. To be specific, his portfolio covers mainly financial services firms, which I will touch on briefly later.
*For more information on auditors in a Big 4 firm, check out our previous article: Big 4 Audit Managers, Living Life In Seasons
The different faces of taxes and the necessity of a tax manager
There’s generally three kinds of taxes: indirect, individual and corporate. In a Big 4, they do all three, and one of their main focus is corporate tax, specifically helping companies by reviewing their tax reports before filing them with the Inland Revenue Authority of Singapore (IRAS).
One might wonder at the necessity of a tax manager, since it must seem logical that companies do their own reports and filing. While that is true, the problem is that many companies (even the big ones) don’t have a specialised tax department. Even if they do have one, it’s going to be small and they usually cannot handle the load of preparing the necessary reports for the company. The problem is compounded by the sheer number of tax rules that changes frequently. Furthermore, IRAS would rather look at tax reports generated by a Big 4 firm simply because it’s more credible, being made by people doing it for a living.
Two types of tax work in a Big 4
This is what’s discussed above, which is really about helping companies prepare tax reports and computations for submission to IRAS. It’s a yearly routine, so there isn’t anything really sexy about it, though it's important to note that this would take up about half of your time.
The other half of your time will be spent on advisory work.
When companies require a financial transaction, they want to make sure it’s tax efficient. That's because when there is a financial transaction involved, it might be liable to be taxed, and they want to minimise the amount they need to pay for taxes. That’s where advisory comes in.
For example, about six to seven years ago the Monetary Authority of Singapore (MAS) gave incentives to encourage companies to set up funds in Singapore, and when they do, there would be tax involved. So the advisory will help companies apply for these incentives to minimise tax or in other words, create tax efficiency.
In another example, if two companies were to merge, there will be taxes involved as well. In fact, the advisory will also assess if it’s profitable for the merger to happen, if there’s tax inefficiencies and if there’s incentives that the companies can apply for.
And if you are wondering if tax matters, just think about your daily spending. In Singapore, eating out is not too big a deal but for a bill amounting above a hundred, service charge and Goods and Service Tax (GST) amounts to over $17, which is the price of a main course already. Now, that's an example of consumer tax, but in corporate tax, the stakes are much higher. Scale the base amounts higher, throw in more taxes to the mix, and it won’t come as a surprise to learn that tax itself can cause businesses to change plans.
A note about financial services and being a tax manager in the financial services industry
Any company that provide a form of financial service (FS) like insurance, banks, credit and the likes become part of the financial services industry. And the differentiation is important because the rules governing them and the tax they are liable for are specific to them. Hence, FS companies are separate from other industries, and as a tax manager dealing with FS companies, your role becomes highly specialised and compounded, dealing with both compliance and advisory, where it is split in other industries.
With this as the context, let’s look at the life of a tax manager in a Big 4 dealing with the FS industry.
Your role as a tax manager in the financial services industry
The concept of chargeability and your time at work
Let’s say you go to work at 830am and work for the standard 8 hours with no break in between; not even toilet breaks, but this is just for example’s sake. If you have only worked on a single client, you will bill that 8 hours to the client, and because you have worked 8 hours out of the 8 hours you are in office, it’s a 100% chargeability. After the standard of 8 hours, any additional time spent is considered overtime.
In reality, what happened above is not possible but it helps to explain the concept of chargeability. And because it’s a per-hour billing (similar to lawyers, except that the charge is lower) and work changes on a daily basis, time to office can be quite flexible. What might affect your timing most would be overseas conference calls, most notably with the States and you are usually at the mercy of the caller’s timing (due to timezone difference).
Back to chargeability. Practically, you could be calling a client for 10 minutes, work on something else for another client for 20 minutes and back to a call with a third client for an hour. At the end of the day you would note these timings: 10 minutes, 20 minutes and an hour (among others) on a timesheet, and submit it at the end of every Friday. In a day, up to twenty different clients might be involved.
It’s not only a means of billing your client, but it’s also a quantifiable way of measuring your performance, albeit not totally accurate and representative but it’s the best they have for now. In other words, it’s the easiest way to measure how much time a day you spend doing work. For each rank, there’s a minimum chargeability to meet but it’s also a fine balance to manage. Theoretically, high chargeability would be favoured but your boss might think you are overcharging and generally inefficient; bill too little and you’d be deemed a slacker.
Charges for each rank defers too, and the timesheet is online, which kind of sucks because when you are rushing in and out of meetings, it’s easy to forget to record it online.
So timing into the office is quite flexible, and the common timings would be anywhere between 730 to 9am. After an overseas call, it’s breakfast time followed by meetings. Lunch kicks in at noon and during off-peak seasons, it can be as long as 3 hours, especially if it’s a farewell lunch for a colleague. Turnover is high so farewell lunches are a commonplace. During peak seasons, lunch become optional.
Meetings resume after lunch and after more calls the day is done. Of course there’s reports to prepare and administrative stuff to do but that’s generally it.
A short day would end about 6pm, and during peak periods you will be looking at 1-2am every day for 2-3 weeks before the filing deadline in the months of October to November (2 months). Preparers and reviewers (see below) usually work more hours, and managers have it a bit easier. In December, pretty much everyone is on leave since hell has frozen over. Come January to March, auditors will start their audit work and as a tax manager, you’d support them in their tax provisions (by auditing the clients’ tax expenses), which can be also quite time consuming.
Managing the well-oiled machine called compliance
There’s four levels for compliance work and hence four roles:
- The preparer (most junior role) would prepare tax computations
- The reviewer (senior in third to fifth year) would review the computations
- The manager (that’s you, in your sixth to seventh year) would review the reviewer’s work
- Lastly the partner will sign off the work. Sometimes, the manager can sign off on behalf of the firm so it doesn’t go to the partner.
Compliance is already a well-thought out, seasoned workflow so there really isn’t much to talk about. If you are one for stability and comfort, compliance is where you’d want to spend most of your time in.
Advisory, the messy fun beyond your comfort zone
Here’s an example of an advisory project.
Let’s say a global company wants to sell something in Singapore, and it involves nine different countries, coordinated by the office in the States. What you’d be doing then as a manager, is to come out with a step plan, which is really an action plan with tax considerations at each step (milestone). You’d also need to check with regulators about their concerns, and at the end, advise whether if it’s even feasible to do it at all. A short project can be a day or two, and long ones can last up to half a year.
What you can enjoy as a tax manager
Compared to auditors, you’d be in the office all the time so you’d pretty much be seeing everyone everyday. Furthermore, it’s also common to work with everyone as you will be handling about 40 clients at the same time, and there’s always a different team for each one.
Add to the fact that the department of financial services has only 30 people, you can see why you’d work with everyone—it’s really not that big a group. And that bit is interesting.
Also, it’s quite a forgiving and nurturing environment in tax departments in the Big 4, with managers like yourself having partners to guide you. Like auditors, it’s feels like an extension of university.
For tax, since it’s unique in different countries and Big 4 firms support clients worldwide, with clients needing information and advisory on international tax, it’s common to have quite a bit of foreigners in your office, which means you’d get to work with a diverse group of people.
As a last note on culture, whenever you speak to someone from a Big 4, here’s how to guess if they are from tax or audit: look at the number of bags, if they are always on the move, and if they are dressed for comfort. If they have have quite a few bags and it’s yes to the questions, then there’s a high chance they are auditors. Also, clients' may perceive auditors as fault-finders, and so clients don’t really welcome them, but as a tax manager, you are there to advise and save money for the company so clients are much more welcoming of you.
As a tax manager, you’d be paid slightly better than an auditor, and work less hours overall. Nobody really knows why, but the general understanding is that tax is highly specialised so you are paid for that speciality. Furthermore, tax managers can sign off tax returns on behalf of the firm (in place of partners), but audit managers cannot sign off audit reports, so there’s definitely more responsibilities as a tax manager. As they say, with great power comes great responsibilities… and better pay.
AS a tax manager, you’d be—depending on how you look at it—forced or given the opportunity to build in-depth knowledge of taxes to better advise people, especially people you care about.
That’s a contrast with in-house tax personnel. As most major companies don’t have a large tax department, if any at all, in-house tax managers would have to pretty much do everything tax related and that diversity of work doesn’t help you to build a good foundation in tax.
What’s not to like as a tax manager. Hint: it’s personal
Compliance is probably the only thing a tax manager would complain about, because it’s very tedious, and since partners would try to let you do the same case out of familiarity, it can get very monotonous. Like doing-the-same-thing-for-six-years-and-counting monotonous. Add to that being a time-sucker, and meticulousness in the form of line-by-line checking, it can get really frustrating.
Having said that, it’s personal because some might like it for it’s routine and predictability, so it really depends on personality. Nevertheless, a meticulous disposition is a must-have for compliance work.
Being a tax manager and its career progression
In a Big 4, you’d be offered positions early in your career so you’d have to decide on your path very early if you’d want to do tax or audit.
The starting pay is crap, but it gets really attractive over the years.
Remember the flow of work for compliance? If you are starting out in tax, you’d be doing grunt work for about two years as a preparer before you move out to be a senior or reviewer in the third year. If you can’t survive that, you’d probably leave on your own. But if you do stay on, you’d get the straightforward progression from preparer to reviewer to manager to partner.
The financial services industry is a unique one with it’s own regulations and requirements, so as a tax manager in a Big 4 covering this industry, you will have to do both compliance and advisory work, which is widely polarised in requirements, and can give you either satisfaction and challenge, or frustration and pain.
Nonetheless, for those deciding between tax and audit, it’s important to ask if the culture highlighted in this article suits you better, with a large amount of time in the office and specialised work, or if being on the go suits you better.
If it’s the former, and being meticulous is not a problem for you, then maybe this might just be the best place for you to be in.