What it Takes to Practice in the Area of Tax Law

DP Naban is a Member of the Malaysian Bar with over 40 years of experience in civil and commercial dispute resolution and corporate advisory practice.  He is an active tax practitioner, having appeared before the Special Commissioners of Income Tax, High Court and Court of Appeal for various tax matters and till date focuses on appellate hearings as well as advising clients on tax planning and structuring issues.  DP Naban also acts as the lead counsel in various civil, commercial litigation and arbitration proceedings conducted under various rules, including the International Chamber of Commerce, the Kuala Lumpur Regional Centre of Arbitration (now known as Asian International Arbitration Centre) and ad-hoc arbitrations under the Arbitration Act 1952 and later 2005.  He has also been appointed to act as an arbitrator.  


How long have you been practicing tax law and how did you begin in that field?

I was called to the English Bar in 1980 and was admitted as an advocate and solicitor of the High Court of Malaya in 1981.  My interest in tax law began during my studies at the Bar, where I studied Revenue Law.  Although some may see it is a dry subject, I thoroughly enjoyed learning it mainly because of the intricacies and technicalities.
I started off as a general litigator and did some tax cases.  Sometime in 2009, I started working more with my colleague S Saravana Kumar.  Together, we delved into various taxation disputes and built a focused legal service from the ground up.  I exclusively practiced tax law and ran a successful practice for more than ten years.  


Should the area of tax law be embarked on by young lawyers? 

As a tax lawyer, your job will encompass a wide range of tasks, including but not limited to: 

Being a tax lawyer is separate and different from organizing your clients’ accounting books.  Tax lawyers usually are called for consultation when there is a tax dispute when the entity is facing a legal issue involving taxes or the issues particularly are tax focused.  For instance, if a Multinational Corporation (“MNC”) receives a tax assessment/notice from the IRB that they disagree with, it would then be prudent for them to hire a tax lawyer to protect their interests especially when the amount at stake is in millions or even billions.  

Practicing tax law exclusively is definitely not everyone’s cup of tea.  As a young lawyer, if you would like to embark in this field, you would have to be someone with some interest in the field, at least to get you started.  As a young lawyer, it is important to be interested in studying the area of tax law, to understand the law and to be willing to put in the hours to learn its technicalities.  Unlike some other areas of law, tax law is hugely dry, unemotional and very technical.  If one enjoyed land law or trust law during their university days, tax law is definitely a path worth considering.  However, it is not necessary to have studied tax law in law school for you to embark on this practice.  As long as one is passionate, keen to learn the subject and willing to put in hard work where necessary, tax law could be very rewarding.  The famous saying that “there are two certainties in life, death and taxes” is not untrue.  It is undeniable that tax law is an important ingredient in literally every commercial, corporate, or personal transaction.  Every facet of life today involves tax in some respect.  It is a big source of revenue for a nation and its subject matter is voluminous and complex.  It is true that there are many stereotypes surrounding tax and tax law, most of it being “negative”.  Then again, so are many other things that are difficult to understand.  


Where are disputes typically heard?

Tax law is one of the few laws in Malaysia that has its own tribunal, similar to the employment tribunal.  Taxpayers have the choice of initiating their challenge to the assessment either at the SCIT, the CAT or at the High Court depending on the issue at hand.  An appeal started at the SCIT, or the CAT may be further appealed to the High Court and then finally to the Court of Appeal, whereas a case started at the High Court may progress all the way up to the Federal Court.  

An appeal via judicial review at the High Court is essentially faster as it only involves the exchange of affidavits as sworn evidence, whereas tribunal appeals in general involve the witnesses giving evidence.  The duration of the entire process depends on the complexity of the case.  In any event, the tribunal route will usually take a longer time for the matter to be disposed of based on the sheer volume of cases registered at the respective tribunals.  A straightforward judicial review application can usually be disposed of within a year or two whereas cases before the tribunal also involve coordination of time with the witness, which would take much longer than judicial review.  
In certain matters, the IRB will even offer for a Dispute Resolution Proceeding involving the taxpayer and the officers from IRB and the parties then may reach a favourable solution or settlement.  


What do the contentious and non-contentious sides of tax law entail and how do they differ?

Tax law involves both contentious and non-contentious work and more often than not, it is a crossover service – this is true now for almost all other areas of law.  The non-contentious side of tax law includes advising on tax related matters, setting up of companies in non-trade zones, transactional tax work and tax planning.  Non-contentious work also may involve the review of compliance levels such as ensuring that the client’s tax practices are in accordance with the law and at the same time the client is able to reap the full benefits of various tax incentives such as Industrial Building Allowance and capital allowance. 
 
Contentious side of the tax law mostly includes commencement of proceedings at the High Court or initiating an appeal at the SCIT.  Contentious matters would also mean any dispute on the impugned notices of assessment, where you take a view that is different from the IRB.  This would include exchanging correspondences with the IRB officers and taking part in Dispute Resolution Proceedings.  


Does the work spill over into non-tax related disputes? If so, how?

Yes, of course.  There are specific provisions in the Income Tax Act that allows for the IRB to collect unpaid taxes upon the issuance of a notice of assessment through civil proceedings.  These are usually called debt recovery proceedings in which the IRB will initiate civil proceedings either through writ or originating summons.  
Besides that, in income tax matters and customs matters alike, there may be certain instances in which some criminal charges may be brought against the taxpayer.  In tax statutes too, there are provisions to allow the IRB to blacklist taxpayers who do not settle their taxes due from leaving the country.
That aside, particularly in matters of structuring of transaction or tax planning, where it involves the Ministry of International Trade and Industry, other areas of law such as corporate law, land law and even intellectual property law may come into play.  


Who are the clients? And what is it like acting on their behalf?

The clients usually are businesses and this ranges from small sized businesses to MNCs.  A big part of the client base consists of businesses and companies as their tax disputes tend to be larger and therefore requiring legal representation.

In certain instances, we also do have individual taxpayers who would be unhappy with the notices of assessment and seek legal advice and/or representation.  


What advice should lawyers give their clients to avoid suits and inspections, etc?

There are in general multiple things that can and should be done by clients to ensure they are not the IRB’s target when it comes to suits and inspections.  To avoid being subjected to inspections and arousing the suspicion of authorities, taxpayers should at all cost avoid: 

It is undisputed that individuals and especially businesses would want to conduct their affairs in a manner which would reduce or even eliminate their tax liability.  However, attempting to reduce your tax liability by deceit, subterfuge or concealment is a crime.  As a taxpayer, especially businesses will always have to skillfully plan in advance on ways to develop strategies to structure their transactions in order to obtain lowest possible marginal tax rate.  


What is a typical day like for someone practicing tax law?

It is true that one day is never like the other, so there may not be a ‘typical’ day for a tax lawyer.  However, a very crucial part of the day on a daily basis would be to keep yourself updated on the ongoings in the tax world.  This may include reading tax publications, keeping updated on key tax cases and judgments, to conduct research on specific areas of law.  

The wide-ranging scope of tax would mean the constant developments in the area and the only way to keep yourself on top of it is by constantly reading and researching.  Aside from that, a typical day also involves giving general advice on tax planning, drafting legal opinions and conducting more research.  


What are some common mistakes made by tax law practitioners?

Some common mistakes made by tax law practitioners or any practitioners for the matter is giving spur of the moment tax and business advice.  A “quick advice” without understanding the complexity of the matter and all the facts at hand may turn catastrophic very easily.  

Another common mistake would be to not keeping themselves up to date on the current affairs in the tax industry.  This would include not being aware of the latest Acts that was passed, any landmark judgments or any amendments made to the tax law.  As a tax lawyer, this is one of the most dangerous pitfalls as it would not only mean giving wrong and outdated advice but also potentially jeopardizing the client’s business or dispute.

As a tax lawyer, it is of the utmost importance for one to keep their knowledge up to date.  You will have to read every change and every amendment made to related Acts and every budget or financial aid announced by the Government.  It is important to remember that chasing money should not be your main intention but rather to better the law and adequately serve the needs of your clients.  


What is your advice to aspiring tax law practitioners? 

Patience.  Patience is a virtue and it cannot be truer in any other situation.  I am not denying that starting out as a junior tax lawyer can be very daunting and most of the time exhausting.  The learning curve is very steep and you would need to constantly be up to date on the ongoings in the tax world as well as constantly research on new laws and cases.  However, if you have the passion to learn and the patience to do it, pursuing tax will definitely pay off.

Brush up on your research skills.  There is no way to run away from conducting research when it comes to tax law.  It makes up most of the young lawyers’ work and being resourceful and knowledgeable, as well as learning to use these resources well will be a huge benefit and a great way to progress in your career.  


What advice would you give to lawyers who are looking to stand out in the crowd of other tax lawyers? 

To be an outstanding tax lawyer, it is important to have creative problem-solving skills.  Taxpayers often approach lawyers for creative but also practical solutions to their problems, this is especially so when it involves businesses.  Besides that, having strong analytical skills is also very important to enable you to spot the client’s issues, gauge the outcome and to formulate strategies that will benefit the client.