Consulting on Controversy: Johan van der Walt
14 June 2014
Posted by: Author: Yolande Botha
Author: Yolande Botha (SAIT)
Q: What are the biggest issues currently on the
tax controversy landscape?
A: Worldwide governments are cash-strapped,
seeking to extract more tax revenues to counteract fiscal deficits. There are currently
some mutually reinforcing "themes” in the tax controversy space: Firstly, there
are more aggressive audits/ investigations by revenue authorities including direct
measures aimed at counteracting what tax authorities regard as unacceptable tax
structuring (e.g. the OECD’s BEPS initiative with its 15 action plans).
Secondly, there is the renewed clampdown on so-called tax havens. Thirdly, one
sees a forceful push for greater transparency with regard to corporate tax
information (e.g. country-by-country reporting) and an attack on bank secrecy
used by High Net Worth Individuals (e.g. the USA’s FACTA legislation and the attacks
on Swiss banking secrecy). Lastly, the tax affairs of a multi-national company
can no longer be treated as a purely internal / domestic issue – civil society,
non-governmental bodies and aid agencies now all take an interest, often
creating negative perceptions and reputational risk for companies that are
viewed as overly tax aggressive. For example, following the 2013 picketing of
its shops in the UK, Starbucks recently reported its first UK sales drop. The
consumer now sits in judgment of the tax policies applied by large
multi-nationals. This has induced companies to reconsider how they manage tax
Q: How do you see tax controversy? Do you prefer
to take a proactive or reactive approach?
A: Tax risk management on a reactive basis means
dealing with the fall-out once it has happened and the damage (e.g. reputational)
has already been done. All tax controversy literature rather advocates a pro-active
approach to tax risk management, i.e. the board and audit committee should take
the lead by upfront setting the tax philosophy that governs the company’s tax
risk appetite, how tax controversy would be dealt with, etc. One can e.g. find
Vodafone’s comprehensive "Tax risk management strategy” document on the
Internet. Tax can no longer be managed purely as a back-office function.
Q: How has your advisory role evolved as tax
controversy has become more prominent in global debates?
A: The tax controversy market is clearly growing
and there is a strong need for services to resolve long-running, acrimonious and
costly tax disputes. The aim should however be to prevent tax disputes and
controversy from arising in the first place.
Q: You worked at SARS for a significant period of
your career. This implies that you have a very distinct understanding of the
links between civil society and public service. How do you see your role now in
A: Globally many individuals working in the tax
controversy area would have had some past revenue authority experience.
Comments are sometimes made that a move from the revenue authority into
corporate practice equates to moving over to "the dark side” which is
unfortunate. But, it has its advantages and, rightly or wrongly, brings some
credibility when engaging with clients.
Q: What strategic decisions do you need to make
when dealing with issues related to tax controversy?
A: Strategy is key with regard to tax
controversy. Know when to push hard and when to back down and settle. Wrong
strategy equals a sub-optimal outcome for the client. Any revenue authority has
a captive market so at all times it’s important that a constructive and
professional interface be maintained with revenue officials.
Q: How did you first get your foot in the door at
the start of your career in tax?
A: I joined SARS as a tax lawyer and progressed
Q: What were the most important decisions that
you made when it come to laying the foundation for your future career growth?
A: Tax is unique insofar as it combines law (the
interpretation and application of tax legislation) with the financial side (as
evidenced in the Balance Sheet and Income Statement). You need to navigate both
the afore-mentioned in practicing tax. This has made tax a specialist area and might
have prevented it from becoming over-traded. In addition, the constitutional
and administrative law aspects are now coming to the fore (e.g. the recent Tax
Administration Act). Tax disputes and controversy involve all these
Q: What has been the biggest career challenge
that you have faced thus far? What opportunities and lessons did you take away
from having faced this challenge?
A: The move from SARS into the fee-writing
advisory world has been both interesting and worthwhile. Having been on both
sides of thee divide brings perspective. Revenue authority staff moving into
practice (and vice versa) has benefits and should be encouraged.
Q: What do you enjoy most about the kind of work
that you do?
A: Globally tax controversy is on a growth
trajectory and, going forward, should deliver interesting opportunities.
Although it has taken a while for tax controversy to really hit the SA shores
we shall in all likelihood see more people and practices move into this area
locally. Being part of an evolving area in tax, which is bound to develop
strongly in coming years, is exciting.
Q: How do you manage to balance your work and
your personal life?
A: Our little ones (Lize 9 and Nic 7) and my wife
Elmarie make it easy to remember what is really important in life. Otherwise
life becomes too taxing!
This article first appeared on the May/June edition of Tax Talk.