The best advisers in Asia-Pacific

Asia's other winners
India
Bansi S Mehta	Bansi S Mehta & Co
Rathin Datta	Price Waterhouse
Indonesia
Sony Harsono	Coopers & Lybrand
Peter Collins	Price Waterhouse
South Korea
Woo Taik Kim	Kim & Chang
Thailand
John Cifor	Deloitte Touche Tohmatsu

Financial turmoil in Asia has been good for the region's tax advisers. Clients with narrow profit margins are looking at tax with renewed interest. Clients suffering losses are looking at the tax implications of restructuring and provisioning debt. Foreign investors, bargain hunting in the region, have boosted the market for international tax advice.

The only flaw in all this is the fact that clients are also scrutinizing fees with renewed vigour. A slow-down in fee collection is reported by a number of firms. Clients are looking for the same level of service, but at a lower cost.

Reshuffling in the rankings this year shows that law firms are holding their own against the accounting firms. Mallesons Stephen Jaques in Australia, Baker & McKenzie in Hong Kong and mainland China, and Anderson Mori in Japan, have all improved on last year's ranking.

However, the size differential between law firms and accounting firms in the region will widen significantly if the Price Waterhouse and Coopers & Lybrand merger goes ahead. Both firms performed well in this year's survey. The idea of the merger is causing a moderate level of anxiety among competitors, although a number of rival firms report that they are poised to benefit from an expected fall out from the merger. In a region where experienced tax advisers are such a scarce commodity, disaffected staff will be snapped up quickly.

The survey results are based on the opinions of named individuals responsible for tax in multinationals and financial institutions. Questionnaires were sent to 2,000 contacts. The response rate averaged 40% across the region.

Australia

Rank	Firm	Tax partners	Tax Professionals	Total partners	Total Professionals
1	Price Waterhouse	53	479	213	2868
2	Coopers & Lybrand	74	502	261	2764
3	Arthur Andersen	32	264	106	1004
4	Shaddick & Spence	2	4	2	4
5	KPMG	63	412	274	2495
6	Deloitte Touche Tohmatsu	34	175	248	1537
7	Mallesons Stephen Jaques	14	43	175	633
8	Ernst & Young	37	280	171	2350
9	Allen, Allen & Hemsley	7	19	100	477
10	Arthur Robinson & Hedderwicks	4	19	66	213
11	Clayton Utz	10	25	169	747
12	Blake Dawson Waldron	figures unavailable

All figures are for the firms' offices in Australia. These are the latest available figures.

Top advisers in Australia
Tony Carroll	Coopers & Lybrand
Tony Clemens	Coopers & Lybrand
Michael Clough	Mallesons
Tim Cox	Price Waterhouse
Ian Dinnison	KPMG
Michael Happell	Price Waterhouse
David Irwin	Price Waterhouse
Larry Magid	Allen, Allen & Hemsley
Michael Wachtel	Arthur Andersen
Tony Pane	Clayton Utz
Cameron Rider	Arthur Robinson
Richard Shaddick	Shaddick & Spence
Ken Spence	Shaddick & Spence
Robert Upfold	Blake Dawson
Neil Wilson	Coopers & Lybrand

Listed in alphabetical order International tax practice is booming in Australia. All firms that we spoke to this year are enjoying big increases in the amount and range of work they are doing for clients. However, the reason for some of this increase is less welcome.

Richard Shaddick, by now a familiar name to regular readers of this survey, declares that the reason for much of the increase is ?the incredible three-year spate of anti-taxpayer legislation in Australia. While we are assured that the legislation is designed to catch only the naughty people, the legislation is drafted so broadly that it represents a huge risk for taxpayers doing quite ordinary things,? he says.

Ian Dinnison, international tax partner at KPMG and voted a leading adviser, describes the Australian Tax Office's (ATO) output as ?an avalanche of legislation?. He cites the recently recorded admission by the tax commissioner that he conducts a ?smell test? about a particular transaction and then looks into the technicalities.

Dinnison believes that this attitude exemplifies the pressures that taxpayers face from the ATO.

Others agree. Michael Clough, partner at Mallesons Stephen Jaques and voted one of the leading tax advisers this year, says that: ?The guidance of the ATO is less of a management tool than it once was. It is less practical. The ATO is constrained by lack of resources and it can't respond quickly enough for the speed at which modern transactions are conducted. When it does respond in time, the answer is invariably negative.?

The upside of this, from Mallesons' point of view, is the increase in tax-related litigation. ?Companies feel there is less stigma attached to using the courts to clarify an issue. The courts have become a tool of clarification where the ATO does not have the time or the resources,? says Clough.

Added to the increased complexity of legislation is a more aggressive audit policy and a tougher stance in areas such as transfer pricing. Shaddick says that much of the legislation and the rulings take a ?heads I win, tails you lose? attitude. As a result, already busy practices are getting busier.

Views may coincide on some of the causes of the increase in work, but that does not mean that advisers are united in their opinions about who will benefit most from the increases. The accountants broadly see rising demand for multidisciplinary practices. Lawyers see their skills increasingly in demand as disputes increase, and litigation skills and experience become more important. Mallesons Stephen Jaques has the largest tax litigation practice in the country. Despite the claims from some consultants that tax lawyers' days are numbered, Michael Clough claims that: ?in the Australian market the trend is the opposite of the death of the tax lawyer?.

Other forces, too, are shaping the direction of the international tax business in Australia. Clough says that the rationalization and globalization affecting corporations and markets all round the world are pressures that: ?Demand a response. We understand this and are looking at ways of responding to these forces.?

Clough believes that the answer probably lies in some form of informal international alliance of tax attorneys. ?Attorneys will rule the transaction side of the business,? he says. Tim Cox of Price Waterhouse agrees that the pressure to provide services to cover large transactions is driving the profession in Australia, but he argues: ?clients want packaged solutions, particularly for large transactions and unquestionably this is going to accelerate the trend towards multidisciplinary work.?

Richard Shaddick suggests that tax will develop as an increasingly separate activity. Although he believes that it will always be related to the practices of law and accountancy, he too thinks that the future is multidisciplinary. ?Multidisciplinary practices are happening now but in a cute way. At the moment they need the imprimatur of the legal profession or it [the legal profession] will end up with egg on its face.?

The biggest event in the Australian tax market, as in every other major market in the world this year, will be the merger of Price Waterhouse and Coopers & Lybrand. Although opinion is divided as to the desirability of the merger, there is agreement that the firm will be an extremely powerful force in the Australian and regional markets.

Neil Wilson of Coopers & Lybrand says: ?In Australia we complement each other and we will form a very powerful force to deliver what clients want. The concept of us being too big is a fallacy because our clients will still deal with the same people who have always given them excellent client service.?

Those who see the proposed merger as the emergence of a new and powerful competitor are less enthusiastic. Richard Shaddick agrees that the firm will be powerful but says: ?It will be great if they use the power to raise standards. But power will also be used to buy price-sensitive work which will hurt the middle firms.?

Tim Cox believes that the merger is part of a realignment of services necessitated by the ?enormous business challenges for the tax profession. One key issue on the horizon is the wide range of tax-related services that clients want. On the one hand, the trend to use professional advisers for complex specialist issues is continuing. At the other end of the spectrum, many clients are looking closely at compliance outsourcing.

?These services require quite different people and skills. The huge market for compliance outsourcing is going to require dedicated people, standardized processes and leveraged technology if professional organizations are to provide these services profitably. Inevitably this is going to necessitate changes as to how and who delivers these different services.?

Ian Dinnison of KPMG expects that the merger of Price Waterhouse and Coopers & Lybrand: ?will not be as good as they would like, nor as bad as we would like?.

The economic troubles affecting much of the Asia Pacific region have, in the short term, produced a mini-boom in certain areas of tax practice in Australia. The substantial reductions in the entry costs to the markets in some countries, through cheaper assets or dramatically devalued currencies, have produced a surge in deals.

In addition, provisioning for bad debt in the financial sector has also increased and restructuring work has grown dramatically. International investors are increasingly risk averse too, and this has led to a greater need for certainty in tax planning and higher quality advice.

Shaddick says that his firm has picked up work through precisely the opposite: poor or negligent advice. ?We have seen a big increase in the amount of professional indemnity work we are handling. There is more litigation against tax advice and this may well be a function of the increased amount and complexity of tax legislation. The most important thing in this climate is making sure that you don't give bad advice,? says Shaddick.

As well as risks for clients there are substantial areas of insecurity for advisers. Not least of these is the ability to hire and retain the best tax advisers or potential advisers. Price Waterhouse's Cox rates staff dissatisfaction as the principle risk for advisers, and one that every firm must address if it is to thrive. ?Our culture is one that values and respects our people which, when coupled with the quality of our clients and work, helps retain our best people. This in turn filters into the campuses and market place and helps our recruiting.?

Richard Shaddick's firm has been looking for an additional recruit for some time. However, as he says: ?I wouldn't want to hire somebody as good as me. They must be better. There is more to know and more skills required; a constant raising of standards.?

Michael Clough of Mallesons argues that there will be more movement at partner level between firms as the market for the best people intensifies. ?Mobility of professionals is likely to increase over the next five to ten years. There will be considerable movement between law firms and accountants. There will be more senior lateral hires and these will be client-led.?

All firms face pressures in their quest to prosper. The biggest face the most. Richard Shaddick, from the smallest firm in our survey, is able to be a little more relaxed: ?We enjoy the luxury of not offering a general service; we select our assignments.? Though he concedes that growth may lead to more pressure: ?at the moment we don't have a dinosaur to feed?.

Hong Kong and mainland China

Rank	Firm	Tax partners	Tax Professionals	Total partners	Total Professionals
1	Price Waterhouse	16	199	66	953
2	KPMG	8	83	62	917
3	Coopers & Lybrand	10	140	50	900
4	Ernst & Young	10	155	40	1000
5	Baker & McKenzie	6	12	51	209
6	Deloitte Touche Tohmatsu	11	156	67	1,580
7	Arthur Andersen	10	135	30	430

All figures are for the firms' offices in Hong Kong. These are the latest available figures.

Top advisers in Hong Kong
Bill Chan	Price Waterhouse
Lloyd Deverall	KPMG
Joseph Fu	Deloitte Touche Tohmatsu
Rod Houng-Lee	Price Waterhouse
May Huang	Coopers & Lybrand(Beijing)
Stephen Nelson	Baker & McKenzie
Michael Olesnicky	Baker & McKenzie
Jeff VanderWolk	Deloitte Touche Tohmatsu
Richard Weisman	Baker & McKenzie
Xiang Xixi	Arthur Andersen (Beijing)

Listed in alphabetical order ?Clients don't want to fix problems any more, they want to say: ?I've got a problem and I want you to fix it',? says Rod Houng-Lee, senior tax partner at Price Waterhouse in Hong Kong.

Tax in Hong Kong is becoming a tougher profession. Clients' expectations are higher and their problems more complex. Whereas in the past it was a safe bet that audit clients would use the same firm for tax advice, the situation is now much more fluid. ?The audit link just gets you a place in the beauty parade,? notes Houng-Lee.

Clients are exercising choice. ?Having worked in two big six firms, I know it is a myth to think you can go to one firm for everything. The problem with the big six firms is that they are not consistent. They are not consistently good even within one office,? says Chris Ingram, tax director at Jardine Fleming in Hong Kong.

As more multinationals move in-house tax expertise into the region, there is greater demand for specialist advice, and also advice that represents real value for money. As Stephen Nelson, tax partner at Baker & McKenzie in Hong Kong notes: ?Regional in-house tax experts are under tremendous pressure to reduce outside costs. That is their mandate. So these people will be very selective, unless they are involved in a dispute situation.?

Ingram agrees that he does not need advice on day-to-day, run of the mill issues. When he seeks external advice it is to add value or provide confirmation in areas where there is doubt. ?The quality of the partner is the deciding factor,? says Ingram.

The parameters of advice have shifted, as clients have become more ambitious. Questions about China tax, for instance, used to focus on benefits and exemptions. But now the questions are more complex. Questions relate to operational issues, corporate reorganizations, mergers and acquisitions, consolidations and the tax implications of assets moving around between joint venture partners.

China tax advice is a key specialization, as multinationals pour more and more investment into the mainland. With 18 different taxes in China, a significant number of which are relevant to multinationals, there is plenty of scope for advice. Moreover, as Monica Ko, tax director at FTB Packaging in Hong Kong, notes: ?Given the ever-changing tax environment in China, we need to be kept up to date with new developments and practical implementation issues?.

Keeping up to date is a particular challenge for mainland China tax specialists themselves. Chinese income tax law and regulations fit into less than 20 pages of A4 paper, but notices play a pivotal role. A number of firms employ full-time librarians to find new laws by trawling through new notices.

Nelson reports that advisers need to be on the telephone constantly to local tax bureaus, trying to clarify interpretation issues. Bill Chan, tax partner at Price Waterhouse, notes that: ?Experienced China tax advisers develop a ?gut feeling? as to how Chinese tax officials would react to a particular proposed transaction, even when there are no rulings on that subject.?

All the firms we spoke to are adamant that Hong Kong will remain an important centre for mainland advice. Some multinationals will move directly into China, sidestepping the Hong Kong springboard ? General Motors has already taken this route ? but with Hong Kong's banking infrastructure financing business for the foreseeable future, Hong Kong will remain a key player.

Shanghai is emerging as a financial services centre, but a country as big as China, growing as quickly as it is, can probably absorb more than one such centre. Shanghai, moreover, has some problems to surmount before it can really challenge Hong Kong ? not least full currency convertibility.

In addition, as Tim Lui, tax partner at Coopers & Lybrand, points out: ?China's tax bureau and the Hong Kong tax authorities have reached an agreement that is tantamount to a double tax treaty ? demonstrating that China is very keen for Hong Kong to continue as a base for operations.?

Thoughts are, however, clearly turning to the mainland. Pepsico's vice president of human resources in Hong Kong, David Ayre, notes that ?the migration of companies and services towards the mainland will require on-the-ground expertise. Five years from now there will be significant movement. Ten years from now the migration will be in full swing,? says Ayre.

?It's up to the clients,? says Roger Best, senior tax partner at Deloitte Touche Tohmatsu. ?A lot of direct investment in China is Hong Kong investment. I cannot see these people moving out. But yes, third country multinationals who have used Hong Kong in the past could start to look for more advice on the mainland,? says Best.

With an eye to this, tax advisory firms are building up their presence on the mainland. Best says that he is ?excited about growth in China?. Deloitte's tax practice in Beijing is bigger than the audit practice. Law firms are having a harder time. Baker & McKenzie is only allowed to have one office, and the number of lawyers allowed to practise in the office is also restricted. With two tax specialists, Baker & McKenzie has the largest mainland tax practice of any law firm.

However, even in Hong Kong, few law firms offer tax expertise. Baker & McKenzie and Johnson, Stokes & Master are the only two law firms that respondents to our survey recommended for tax work. These two firms aside, Ingham says that he has been very disappointed with the quality of tax advice from Hong Kong's law firms. ?If a law firm is drawing up a deed for a fund they sometimes throw in a tax note, but I have seen some terrible ones,? says Ingram.

The accounting firms in Hong Kong are fairly upfront about wanting to set up their own law firms ? Arthur Andersen has already done so in the form of Ede Charlton. A multidisciplinary bill, recently presented to LegCo, was thrown out, but Price Waterhouse's Houng-Lee is confident that the big six firms will find a way through. ?Hong Kong's rules are very similar to those in the UK, and it is no secret that a number of UK firms have their own law firms?. In mainland China, the accounting firms and law firms are described as more head to head, with the accounting firms more often crossing the line into law, albeit as a branch of ?business consultancy?.

On a separate tack, Deloitte Touche Tohmatsu last year expanded its tax practice, or at least its potential tax practice, by merging with local accounting firm Kwan Wong Tan & Fong. The merger was something of a coup. Houng-Lee describes Kwan Wong Tan & Fong as ?the only game in town? with a top-tier client base.

Some commentators question how well Deloitte has maximized the opportunity to access this client base, but Best states that the firm is ?gearing up to tackle? this significant opening, and is ?making extraordinary efforts to make clear the tax capabilities on offer?.

Tax advisers who last year predicted that the 1997 handover of power would have a limited impact seem to have been vindicated. Hong Kong remains a favoured centre for regional advice. ?Hong Kong has the edge for regional tax planning,? says Michael Olesnicky, senior tax partner at Baker & McKenzie. According to one adviser: ?The expertise is here and the Hong Kong attitude is ? this is what we want to do, how can we do it? In Singapore, it is more ? this is what we want to do, why can't we do it??

The only question perhaps is how far mainland China tax advice will follow the Hong Kong model. As Deloitte Touche Tohmatsu's Best says: ?In Hong Kong any tax professional worth his salt will advise in accordance with an interpretation of law. If the Inland Revenue challenges, they will have no qualms about defending that interpretation. Will tax professionals in China be able to operate as they do in Hong Kong, or will they adopt a Singapore approach??

Japan

Rank	Firm	Tax partners	Tax Professionals	Total partners	Total Professionals
1	Deloitte Touche Tohmatsu	21	113	400	2134
2	Coopers & Lybrand	10	100	232	1,109
3	KPMG	15	200	n/a	n/a
4	Price Waterhouse	15	118	49	947
5	Arthur Andersen	10	110	n/a	n/a
6	Anderson Mori	2	2	23	80
7	Nagashima & Ohno	4	n/a	24	69
8	Showa Ota Ernst & Young	11	160	31	370
9	Tokyo Aoyama Law Firm (Baker & McKenzie)	Figures unavailable

All figures are for the firms' offices in Japan. These are the latest available figures.

Top advisers in Japan
Mark Campbell	Arthur Andersen
Shinji Ishiguro	Coopers & Lybrand
Hiroo Kato	Price Waterhouse
Hirotomi Kimura	Nagashima & Ohno
Yuko Miyazaki	Nagashima & Ohno
Morihiro Murata	Tokyo Aoyama Law Firm (Baker & McKenzie)
Kenichi Nakano	Anderson Mori
Gary Thomas	White & Case
Dean Yoost	Coopers & Lybrand

Listed in alphabetical order The Japanese economy may have slumped to 0% growth, but some of the country's tax advisory firms are enjoying double digit growth figures. Dean Yoost, head of tax at Coopers & Lybrand, notes that the firm's tax practice grew by 15% in terms of fee income for the year ended March 1998. Yoost describes himself as ?bullish last year, and still bullish this year, although I accept that the economic signs are not positive?.

?Tax practitioners go out of business when the economy stays the same,? reports Hiroo Kato, head of tax at Price Waterhouse. Kato notes that at a recent meeting of various industry groups he felt conspicuous, and almost apologetic, in his role as a representative of a flourishing business.

The government's use of tax reform to stimulate the economy is good news for tax advisers. Yuko Miyazaki, tax partner at Nagashima & Ohno, notes that beyond corporate tax cuts the government could turn its attention to more sophisticated measures. ?Corporate reorganizations could be made more tax efficient ? to date we have no special law for splitting up companies. Consolidated tax returns could be introduced. Withholding tax on various financial instruments could be reconsidered,? says Miyazaki. Change management is a big business opportunity for Japan's tax advisers.

A shortage of international tax advisers in Japan, noted by everyone we spoke to, does not mean that clients settle for less than the best. Donald MacKenzie, general manager of ING in Japan, points out that, particularly in the financial services area, advisers need to keep up with transactions that may be cutting edge.

?In Japan the tax code does not anticipate the structure of many transactions. For example, credit derivatives ? what are the tax implications? Who knows? So we need advisers who understand the transactions, who may have had exposure to similar deals, and who understand the views prevalent in the tax office,? says MacKenzie.

Stephen King, finance director at Avon Products in Tokyo, similarly notes that ?Japan isn't a jurisdiction where you can pick up a book and find the answer to a tax issue?.

Because of the sometimes unpredictable nature of the tax system, King emphasizes the need for external tax advice that adds value all along the line. ?When advisers start to add to my list of possible issues, and come up with responses to those issues, I feel comfortable that I am getting good advice. If there are issues, I want to know about them in advance, I don't want to confront a problem for the first time because the company chairman notices it, or the NTA raises it,? says King.

Japan's very limited system of advance rulings, coupled with limited rights of appeal against assessments, means that external advice has to be right, and it has to be right first time around. ?You do not want to give the NTA reason to start looking into the company's affairs,? says Andrew Taylor, finance and business planning director at Ford in Tokyo. ?Once they start looking, they will probably find things. Take transfer pricing ? the NTA is not focused on a net approach. If you import three products at prices A,B,C, and price B is too high, they will challenge that price, even if A is okay and C is too low by their own standards.?

Takashi Kuboi, head of tax at KPMG, describes Japan's NTA as ?the most difficult tax authority to deal with,? and according to Coopers & Lybrand's Yoost, the tax authority is becoming more aggressive ? particularly in the areas of transfer pricing and withholding tax.

Ex-NTA and tax office officials, employed by some tax advisory firms, provide a comfort zone for clients. King recognizes that the opinions of ex-officials are not infallible, but believes there is a good chance that their opinions will be in step with those of ex-colleagues. ?This type of knowledge, which you do not find written down anywhere, is very valuable. Based on our experience, I would say so far so good?.

The big six firms provide international tax advice to mainly foreign-owned multinationals. Japanese companies have, traditionally, not been significant buyers of international tax advice. This tradition is, however, being reassessed. According to Kuboi: ?When Japanese companies could make money easily, they did not have to pay too much attention to tax. But now when the economy is less buoyant, and tax is the most expensive item, they are starting to look at it more closely.?

Yoost believes that as Japan's tax rate comes down: ?We will start to see Japanese companies tuning into the amount of tax they are paying overseas,? because it will be more comparable. However Kuboi notes that many Japanese still treat paying tax as a matter of pride. ?When I go out to see clients, they sometimes bring out a framed letter from their tax office ? a letter thanking them for paying so much tax?.

Price Waterhouse's Kato describes Japanese companies as more often international than global. Their mentality is becoming more global, but it cannot be an overnight transformation. Kato describes Japanese investment overseas as ?comb style' ? each strand of investment is treated separately.

Ford's Taylor sometimes worries that tax advisers in Japan are too conservative: ?The client/adviser relationship can run into issues where the adviser typically takes a more conservative view of tax avoidance,? he says. Perhaps the traditionally cautious, non-confrontational approach to tax has a subliminal effect. ?Advisers sometimes say ?you need to pay $5 million in tax, but there is no risk' ? as though $5 million is a small price to pay. But that $5 million is the company's $5 million, not their $5 million. Sometimes I think they do not push hard enough to keep the tax bill down,? complains the tax director at one US multinational.

Perhaps to counteract this sense of ?them and us', KPMG's Kuboi is very keen on the idea of the tax adviser as the business partner of the client. ?We may not have cash, but we can bring people, expertise, experience and know-how to the partnership. We can utilize these intangibles for the client,? says Kuboi.

ING's MacKenzie believes that law firms are less prone to ?wishy-washy advice? than accounting firms, but tax expertise in law firms is still fairly limited. Yuko Miyazaki, tax partner at Nagashima & Ohno, believes this may be because Japanese law firms have until recently focused on litigation, and there is a limited market for tax litigation advice.

Both Nagashima & Ohno and Anderson Mori are highly recommended in the tax field by in-house tax counsel, although Miyazaki believes there is still lack of awareness of tax expertise in law firms. ?Once, when I attended a meeting with a US client, the representative of the Japanese company that was on the other side of the deal seemed surprised to see me there and said ?Do Japanese lawyers practise tax?'.? They do, and Miyazaki identifies three main areas of demand: corporate reorganizations; financial institutions work, where the firm acts as arranger; and transfer pricing.

The demand for transfer pricing advice has not yet peaked, according to all the advisers we spoke to. As the NTA's target shifts ? from the pharmaceutical industry to automobile manufacturers to high technology companies ? new transfer pricing clients spring up. Alerting clients to the fact that they may be within the NTA's viewfinder, is part of the transfer pricing adviser's role. The tax director at one multinational reports that he appreciated Coopers & Lybrand highlighting the need to prepare a transfer pricing defence document, because shortly afterwards the NTA approached the company to ask for pricing details.

Transfer pricing is seen as such a critical area of tax advice that many multinational companies will seek transfer pricing advice from a firm other than their regular advisers. Mark Campbell, a leading adviser at Arthur Andersen, believes that clients are right to be choosy and seek creative solutions.

?The NTA basically feels as if they were ?mugged' by the IRS in the early 1990s, and they are giving transfer pricing a very high priority. They are well prepared and will not easily give up. They have specifically designed their methodolgies to negate OECD/CPM type approaches. Companies relying on that kind of approach and expecting to win in competent authority may be disappointed. We have therefore had to experiment with a number of creative strategies. Whoever designed the NTA's approach knew exactly what they were doing,? says Campbell.

Dean Yoost similarly does not underestimate the NTA, but says that it is possible to take methodologies that have worked overseas, and adapt them. ?We like to think we are one step ahead of the NTA,? says Yoost.

David Roach, Europe tax partner at Price Waterhouse in Tokyo, points out that to win transfer pricing work from US and European multinationals, it is often essential to win the trust of decision-makers at the company's headquarters. It therefore makes sense for firms in Japan to have Europe and US transfer pricing specialists on board ? to forge the link.

Recruitment of US and Europe tax specialists to work in Japan can be a challenge. The head of tax at one big six firm tells the tale of a new US recruit coming into his office after one week and saying ?I'm going home?. The head of department assumed the recruit meant that he felt sick and was going home for the day. In fact ?home' meant back to the US.

However, Kuboi chuckles as he says that cultural differences/problems can be overstated, and that the real issue is money. According to Kuboi: ?advisers from overseas need to understand the Japanese way of life, but any normal human being can cope.?

International tax advisers are in short supply in Japan. ?With 100 tax professionals and 10 tax partners we are one of the largest firms ? that does not give us a large population to draw on,? says Coopers & Lybrand's Yoost. The fact that many Japanese staff are sent to overseas offices for two to three years is an added strain on resources. Kato notes that six of Price Waterhouse's 12 Japanese tax partners went on 2-4 year tours of duty overseas.

Japan is a jurisdicton where clichés about good tax advice do not fit. For instance, although Yoost believes that firms with strong networks in Asia are the firms that will succeed in the future, he recognizes that many multinationals treat Japan as a separate part of the puzzle ? the demand for regional advice from Japan is limited, and advisers have to match up with that, not impose a mantra of the infallible regional network.

An extremely proactive approach to selling tax services, can test the patience of already overstretched in-house tax counsel. The prospect of being approached by firms selling services does little to inspire ING's MacKenzie. ?I'm here in the office until 8,9 or 10 o'clock every evening. It's not the best use of my time to be entertaining proposals from every firm in Tokyo?.

New Zealand

Rank	Firm
1	Price Waterhouse
2	Russell McVeagh McKenzie Bartleet & Co
3	Coopers & Lybrand
4	Chapman Tripp Sheffield Young
5	KPMG
6	Arthur Andersen
7	Ernst & Young
8	Simpson Grierson
9	Bell Gully Buddle Weir

Individuals
Kevin Best	Coopers & Lybrand
Craig Elliffe	KPMG
Teresa Farac	Arthur Andersen
Susan Glazebrook	Simpson Grierson
Peter McLeod	Chapman Tripp
John Sherwin	Coopers & Lybrand
Ross Stitt	Russell McVeagh
Tim Walton	Price Waterhouse

Listed in alphabetical order Tax advisory firms in New Zealand report record growth for 1997. Kevin Best, senior tax partner at Coopers & Lybrand, notes that in 1997 the firm achieved its highest ever growth in fee income, and increased personnel numbers by 15%.

Susan Glazebrook, tax partner at law firm Simpson Grierson, similarly reports ?major growth?, but acknowledges that there is a definite shortage of tax professionals ? particularly those with over five years' experience. ?There is a shortage of tax advisers generally in New Zealand. As the market has grown, the number of experienced tax advisers has not grown accordingly...This is a problem for both accounting firms and the legal firms, which are to an extent competing for the same pool of expertise,? says Glazebrook.

Financial instability in Asia has had a limited impact so far in New Zealand. Tim Walton, tax partner at Price Waterhouse, notes that there has been a slight downturn in the number of transactions that clients undertake, but he believes that there may be a delayed ?hit'. ?Tax services are generally affected a few months after a recession starts to hit. The only rationale for this is that transactions that have already commenced continue. By the same token once a growth period commences, the growth in tax services usually lags behind the commencement of that growth phase,? says Walton.

Leading advisers in this year's survey agree that transfer pricing advice will be a key area of growth in New Zealand in the future. A new transfer pricing regime was introduced in 1995, and guidelines were issued in October 1997. ?The transfer pricing regime in New Zealand is relatively immature, with most clients taking a fairly low key approach at this stage. That will change as the revenue authorities start to adopt a higher profile in relation to transfer pricing,? says Best.

Glazebrook notes that accounting firms have enjoyed the lion's share of transfer pricing work in the last couple of years, but: ?as disputes begin with the new regime, so will the demand for legal involvement and we believe that demand will continue to grow in the area as a direct function of the disputes?.

In addition to modernization of the transfer pricing regime, New Zealand has recently introduced a binding rulings regime, new dispute resolution and a more severe penalties regime. In response to these changes ?clients are increasingly looking at tax as a risk management exercise,? says Best. ?Clients need greater certainty in all of their tax positions, as the costs of even inadvertent non-compliance have been greatly increased,? notes Glazebrook.

The key to good tax advice in any area, according to Price Waterhouse's Walton, is to put yourself in the client's shoes and ask the question: ??What would I be looking for in receiving such advice?'. If I am unsure, then I will ask. On completion, I ask myself ?would I be willing to pay for the advice provided?'. If I am happy I can answer all these questions in the affirmative, then I feel that I am providing value-added service?.

Perhaps the best advice is provided when advisers are genuinely interested and challenged. Glazebrook states that she finds structured finance and cross-border structuring the most interesting areas of practice. ?I personally find this work the most stimulating, given that it not only involves ?thinking outside the square' and coming up with creative solutions to ensure that the structure of the transaction works, but also that documentation (involving often unique concepts) covers all aspects,? says Glazebrook.

Singapore

Rank	Firm	Tax partners	Tax Professionals	Total partners	Total Professionals
1	Price Waterhouse	9	149	33	650
3	Arthur Andersen	8	115	18	390
3	Ernst & Young	9	112	33	703
4	KPMG	8	n/a	40	n/a
5	Coopers & Lybrand	8	120	34	578
6	Deloitte Touche Tohmatsu	4	n/a	27	425
7	Baker & McKenzie	3	5	13	62
8	Khattar Wong & Partners	3	8	50	112

All figures are for the firms' offices in Singapore. These are the latest available figures.

Top advisers in Singapore
Cheong Choy Wai	Arthur Andersen
Jenny Lim	KPMG
Laurence Chan	Price Waterhouse
Peter Tan	Price Waterhouse
Wong Kien Kong	Baker & McKenzie
Chong Lee Siang	Arthur Andersen
Ajit Prabhu	Deloitte & Touche

Contradictory forces are at work in the Singapore tax market. Local multinationals are feeling the pressure from the economic downturn and are putting pressure on tax advisers to reduce their fees. On the other hand, the regional downturn has brought new investors into the region keen to take advantage of the substantially reduced entry costs in many markets.

?There are lots of foreign investors on ?look see' missions. The North Americans are not signing the cheques yet though the Europeans have started to,? says Ajit Prabhu, tax partner with Deloitte & Touche. These investors are conducting due

diligence investigations and tax practitioners have seen the benefit.

The economic downturn has given rise to growth in other ways too. Chris Kinsella of Coopers & Lybrand points to the tax issues arising from banks having to make provisions of hundreds of millions of dollars as opposed to tens of millions. ?There are deal work-out scenarios that the region has not had to deal with before. Regional borrowers, bad debts and loan defaults are all areas with which banks need assistance,? he says.

Chong Lee Siang of Arthur Andersen also highlights the balance of gains and losses caused by the economic problems: ?The financial turmoil in Asia-Pacific has had a negative impact on outward investments into the region to, for example, Indonesia, China and India. However, this is compensated for by the renewed interest in investing into Singapore.?

Jenny Lim at KPMG is mindful of the pressure that her firm is under with regard to some domestic clients, but also claims to have seen a sharp upturn in the number of foreign investors looking at the possibilities. ?We have seen a lot of enquiries from European and American clients asking us what the opportunities are. Many of them are looking at equity and real estate funds,? she says.

Laurence Chan, a nominated leading adviser from Price Waterhouse, believes that while the regional economic downturn may have some short-term impact, in the longer term tax will have a more upfront role to play: ?even now, greater complexities and sophistication can be seen in business deals and this will require a higher level of specialist tax consultancy to support it.? Kinsella concurs: ?Banks and borrowers will tolerate more complexity as margins are now finer than they once were. Whereas before tax did not wag the commercial dog, that emphasis is changing,? he says.

Laurence Chan points to what he sees as an added pressure: ?The risks in Singapore to clients and advisers are similar. Both will suffer if they do not come to grips with the reality that Singapore can only prosper as part of the global economy.? Ajit Prabhu agrees and says that advisers must adopt an international approach. ?Clients are increasingly looking to manage tax as a regional or even global cost. They are not interested in the purely local solution therefore tax planning must consider the wider ramifications?.

A permanent pressure in Singapore is the availability of sufficient numbers of quality advisers. Ajit Prabhu of Deloitte & Touche says that: ?To a very large extent Singapore is a seller's market?. The merger of Coopers & Lybrand and Price Waterhouse is seen by some as an opportunity to boost staff numbers. Many are expecting a fall-out of some partners and staff who decide that the newly-merged firm is not for them.

Jenny Lim of KPMG says: ?one plus one in this case is less than two. We certainly hope that we will benefit from the fall-out in terms of both staff and clients.? Lim expects that the necessary integration process for the two firms will lead to advantage for KPMG. ?They will need time to blend their cultures, perhaps one or two years, and they will have to be more inward looking. We hope we will be able to spend the time to focus externally and capitalize.? Ajit Prabhu is hopeful that Deloitte & Touche will also benefit: ?We hope that, through cultural incompatibilities, there will be people looking to join us. We hope there will be a lot of that. We want to pinch good people?.

However, Coopers & Lybrand's Kinsella argues that this prospect is unlikely: ?I can't see it happening. This merger is taking place when the tax market is booming. I don't know how it will affect the other firms but it's business as usual as far as we are concerned.? Arthur Andersen's Chong Lee Siang is even more sanguine: ?I don't see the Price Waterhouse and Coopers & Lybrand merger changing the market in any significant way,? she says, ?there is a perpetual shortage of good tax professionals in this market place. The future is still very bright for those who love the challenges of the tax profession?.

Specialist areas of practice
	Australia	Hong Kong	Japan	New Zealand	Singapore
Compliance	1 Coopers & Lybrand 2 Price Waterhouse 3 Arthur Andersen 4 KPMG 5 Ernst & Young 6 Deloitte Touche Tohmatsu	1 Arthur Andersen 2 Price Waterhouse 3 Ernst & Young 4 Coopers & Lybrand 5 KPMG	1 Deloitte Touche Tohmatsu 2 Showa Ota Ernst & Young 3 KPMG 4 Coopers & Lybrand 5 Arthur Andersen 6 Price Waterhouse	1 Price Waterhouse 2 Coopers & Lybrand 3 KPMG 4 Ernst & Young 5 Deloitte & Touche	1 Arthur Andersen 2 KPMG 3 Price Waterhouse 4 Ernst & Young 5 Coopers & Lybrand 6 Deloitte & Touche
Mergers and acquisitions	1 Clayton Utz 2 Shaddick & Spence 3 Mallesons Stephen Jaques 4 KPMG 5 Coopers & Lybrand 6 Price Waterhouse 7 Atanasokovic Hartnell	1 Price Waterhouse 2 Baker & McKenzie 3 KPMG 4 Coopers & Lybrand 5 Arthur Andersen 6 Deloitte Touche Tohmatsu	1 Price Waterhouse 2 Deloitte Touche Tohmatsu 3 Coopers & Lybrand 4 Nagashima & Ohno 5 Arthur Andersen 6 Anderson Mori	1 Russell McVeagh 2 Coopers & Lybrand 3 Price Waterhouse 4 Chapman Tripp	1 KPMG 2 Price Waterhouse 3 Ernst & Young 4 Arthur Andersen 5 Coopers & Lybrand 6 Khattar Wong
Transfer pricing	1 Price Waterhouse 2 Arthur Andersen 3 KPMG 4 Coopers & Lybrand 5 Deloitte Touche Tohmatsu 6 Ernst & Young	1 Price Waterhouse 2 Coopers & Lybrand 3 Deloitte Touche Tohmatsu 4 Baker & McKenzie 5 KPMG	1 Price Waterhouse 2 Coopers & Lybrand 3 Deloitte Touche Tohmatsu 4 Nagashima & Ohno 5 KPMG 6 White & Case	1 Price Waterhouse 2 KPMG 3 Deloitte & Touche	1 Price Waterhouse 2 Ernst & Young 3 Coopers & Lybrand 4 Arthur Andersen
Capital markets	1 Mallesons Stephen Jaques 2 Arthur Andersen 3 Price Waterhouse 4 Shaddick & Spence 5 KPMG 6 Blake Dawson Waldron 7 Arthur Robinson & Hedderwicks	1 Baker & McKenzie 2 Price Waterhouse 3 KPMG 4 Coopers & Lybrand 5 Schroders	1 Nagashima & Ohno 2 Deloitte Touche Tohmatsu 3 Showa Ota Ernst & Young 4 Coopers & Lybrand 5 Price Waterhouse 6 Mitsui & Yasuda	1 Chapman Tripp 2 Ernst & Young 3 Coopers & Lybrand 4 Russell McVeagh 5 Bell Gully Buddle Weir	1 Price Waterhouse 2 Ernst & Young 3 Coopers & Lybrand 4 KPMG 5 Arthur Andersen 6 Shook Lin & Bok
Cross-border structuring	1 Arthur Andersen 2 Mallesons Stephen Jaques 3 Clayton Utz 4 Shaddick & Spence 5 Price Waterhouse 6 Coopers & Lybrand	1 Price Waterhouse 2 Baker & McKenzie 3 KPMG 4 Coopers & Lybrand 5 Arthur Andersen 6 Deloitte Touche Tohmatsu	1 Arthur Andersen 2 Price Waterhouse 3 KPMG 4 Deloitte Touche Tohmatsu 5 Baker & McKenzie 6 Showa Ota Ernst & Young	1 Russell McVeagh 2 Price Waterhouse 3 Simpson Grierson 4 Chapman Tripp 5 Coopers & Lybrand	1 Arthur Andersen 2 KPMG 3 Ernst & Young 4 Baker & McKenzie 5 Coopers & Lybrand
Indirect taxation	1 Arthur Andersen 2 Coopers & Lybrand 3 Deloitte Touche Tohmatsu 4 Price Waterhouse 5 KPMG 6 Ernst & Young	1 Price Waterhouse 2 Ernst & Young 3 KPMG 4 Arthur Andersen 5 Coopers & Lybrand	1 KPMG 2 Arthur Andersen 3 Coopers & Lybrand 4 Showa Ota Ernst & Young 5 Deloitte Touche Tohmatsu	1 Price Waterhouse 2 KPMG 3 Ernst & Young 4 Chapman Tripp 5 Coopers & Lybrand	1 KPMG 2 Price Waterhouse 3 Arthur Andersen 4 Coopers & Lybrand 5 Ernst & Young
Project finance	1 Arthur Andersen 2 Mallesons Stephen Jaques 3 Price Waterhouse 4 Shaddick & Spence 5 Coopers & Lybrand 6 Greenwood Freehills	1 Baker & McKenzie 2 Price Waterhouse 3 Deloitte Touche Tohmatsu 4 KPMG	1 KPMG 2 Price Waterhouse 3 Showa Ota Ernst & Young 4 Baker & McKenzie 5 Coopers & Lybrand 6 Milbank, Tweed	1 Chapman Tripp 2 Simpson Grierson 3 Ernst & Young 4 Russell McVeagh 5 Price Waterhouse 6 Kensington Swan	1 Ernst & Young 2 Price Waterhouse 3 KPMG 4 Baker & McKenzie 5 Khattar Wong & Partners
Joint ventures	1 Price Waterhouse 2 Mallesons Stephen Jaques 3 Clayton Utz 4 Arthur Andersen 5 Shaddick & Spence 6 KPMG	1 Price Waterhouse 2 Baker & McKenzie 3 Arthur Andersen 4 Coopers & Lybrand 5 Ernst & Young	1 Coopers & Lybrand 2 Price Waterhouse 3 Showa Ota Ernst & Young 4 Deloitte Touche Tohmatsu 5 Baker & McKenzie 6 KPMG	1 Russell McVeagh 2 Price Waterhouse 3 Coopers & Lybrand 4 Chapman Tripp	1 Price Waterhouse 2 KPMG 3 Coopers & Lybrand 4 Ernst & Young 5 Arthur Andersen 6 Deloitte & Touche
Asset finance	1 Mallesons Stephen Jaques 2 Price Waterhouse 3 Greenwood Freehills 4 Blake Dawson Waldron 5 Allen Allen & Hemsley 6 KPMG	1 Baker & McKenzie 2 Price Waterhouse 3 Arthur Andersen 4 KPMG 5 Coopers & Lybrand	1 Coopers & Lybrand 2 Arthur Andersen 3 KPMG 4 Showa Ota Ernst & Young 5 Deloitte Touche Tohmatsu 6 Price Waterhouse 7 Tokyo Kyoto Accounting Office	1 Russell McVeagh 2 KPMG 3 Price Waterhouse 4 Simpson Grierson	1 Ernst & Young 2 Price Waterhouse 3 Coopers & Lybrand 4 KPMG 5 Arthur Andersen
Personal taxation	1 Price Waterhouse 2 Arthur Andersen 3 Coopers & Lybrand 4 Pitcher Partners 5 Deloitte Touche Tohmatsu	1 Price Waterhouse 2 Ernst & Young 3 Arthur Andersen 4 KPMG 5 Deloitte Touche Tohmatsu	1 Arthur Andersen 2 Price Waterhouse 3 KPMG 4 Coopers & Lybrand	1 KPMG 2 Arthur Andersen 4 Price Waterhouse 5 Coopers & Lybrand	1 KPMG 2 Price Waterhouse 3 Arthur Andersen 4 Ernst & Young 5 Drew & Napier