AdrianHouse

This Monday, my Partner walked by and talked to me. 

"hi adrian, you know there is a competition about sharing oneself's story in our firm",

"maybe you should go for a try.  The theme is development.  Write a  short story, give me for a review before posting and then wish you can win the Apple."

I accepted her invitation .

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Negotiation with Tax Authority

I recall, one day of September 2009, my manager asked me to be the in-charge senior for a tax engagement of assisting client in performing tax clearance for service charge. “It may not be an easy case”, unforeseen challenge looming through his word. Our client was a manufacturing Foreign Invested Enterprise in Waigaoqiao Free Trade Zone of Shanghai. Since 2008 client had requested its overseas related-parties to provide back-office services, e.g., sale and marketing, finance services, etc. Service charges in millions of USD had been accrued quarterly for years but not remitted. The in-charge tax bureau, however, denied client’s tax clearance application and requested the supporting documents (without providing any explanation).

Then I became a frequent traveler to the tax bureau, accompanied with manager in tax meetings. The tax officials took a bird view of the service contract and then rest in the details, e.g., the passport/travel record of the individuals who provided the services, such individuals’ duties, service fee breakdown, etc. Next came the back-and-forth tax meetings, with an aim to get their consent to our presentation. Personally, the tax negotiation appeared to be an unbalanced “bargaining” where the tax authority had predominance over the game. And our reactions were well controlled to avoid unnecessary debates but build rapport matters. 

In this situation, we tried to manage the timing and pace. Generally, the more information we hold, the more bargaining power we have. We prepared more documents (than tax authority’s requirement) and presented such information (if so requested) to tax authority piece by piece (so as to satisfy their appetite and manage their expectation) unless we met with some tricky request.

“Please show us, how the local entity benefits from the service provision”, the tax official said with a poker face. At office, “What do you think?” Manager looked at me. “We can help client to collect the sample deliverables, say emails, trouble shootings…like the walkthrough of audit procedure“. My 1-year experience in Assurance shed a blaze of light. Then in another day, my colleague and I were at client’s premise to collect and compile the sample deliverables. At last, we prepared and presented a beautiful brochure filled with sample deliverables to the tax authority for final assessment. 

In April 2010, client called us that they had obtained the relevant Tax Clearance Certificate. Their voices with gratitude jumped out of the phone. Afterwards, our case has been viewed as a useful reference to colleagues. Retrospectively, while it may be an empowering thing to experience different kinds of challenges arising from our work on a daily basis, it is also true that there are times when we can witness our development and rejoice the progress with colleagues. This is inspiring!