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WTS taps untapped China market for tax consultancy
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Tax consultancies should play the role of both a cushion and a supervisor to help build a financial ecosystem for the world’s second largest economy, Munich-based tax consulting network WTS told Shanghai Daily in an interview.
“The development of the consultancy sector is an important indicator of market maturity of an economy,” Martin Ng, managing partner of WTS China told Shanghai Daily.
“With China taking further steps to transform its economy and the city of Shanghai trying to develop into an international financial center, attracting more players into the tax consulting industry is crucial for China and Shanghai to reach their goals,” Ng said.
Representing clients, mostly German, American, British and Italian companies in China, WTS specializes in tax consulting services and stays away from auditing business to avoid conflicts of interest. Its services range from international tax solutions, tax litigation and tax consulting for cross-border mergers and acquisitions, to project management advice.
Having operated in China for nearly ten years, WTS aims to become an alternative specialist other than the Big Four audit firms by offering efficent and focused solutions and boosting its presence in the manufacturing sector, Ng said.
“WTS has witnessed an improvement in business environment in China and tax consulting firms have benefited from the city’s preferential policies,” Ng added.
The managing partner with 25 years of professional consultancy experiences said China’s regulations on foreign consulting firms are more relaxed and the threshold has been lowered for them to open subsidiaries in China.
“We admit that we are a new player in the field and we have a lot room for improvement,” he said, adding that WTS will form a new team in south China and Hong Kong to meet the needs of new customers there.
Though more and more Chinese enterprises want to invest overseas, many don’t treat tax consulting services as an essential part of their strategies to control risks. The idea hasn’t yet rooted in their mind.
Encouraged by the “go-out policy” initiated by the government in 1999, many Chinese companies are engaged in overseas mergers and acquisitions, which increased 17 percent to a record 174 deals in the first half of this year and their total value jumped 24 percent year on year, according to PricewaterhouseCoopers.
“M&A costs a big chunk of capital investment. There are follow-up costs to be considered, too,” Ng said. “Tax consulting and strategy advice should be included in a service package for Chinese state-owned and privately-owned enterprises planning to invest overseas. There is a huge market for our company.”
“If an economy is willing to pay 70 percent of its budget on consultancy services … it won’t be hard to build a good financial ecosystem and become an international financial center founded on that ecosystem,” Ng said.
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