EY’s Tax Insights: legal education is changing for the tax professionals of the future

tax15-3a-picture-story-05(1)By Giselle Weiss

The skills that businesses are looking for in entry-level tax professionals are increasingly at odds with the skills that graduating students possess. To produce practice-ready staff equipped to deal with today’s complex tax challenges, universities and hiring organizations need to work together.

At an EY event held last year in Zurich on the future of tax, one executive remarked that just 15 years ago the tax function was “a group of technical experts who knew the law.” But the tax profession has evolved in the ensuing years, and universities that educate the pipeline of talent now face the challenge of transforming their tax curriculum and training to ensure students are equipped with the required skills for the job market of today and tomorrow.

The central function of the tax office has evolved from strategy and planning into risk management, says William Byrnes, professor of law and associate dean at Texas A&M University. This evolution has been accelerated by trends — primarily globalization, transparency and regulatory reform — and by the OECD (through the project on Base Erosion and Profit Shifting or BEPS), the United States (through the Foreign Account Tax Compliance Act) and the European Union.

The demand for new competencies has created a so-called talent expectations gap, the disconnect between what businesses expect from their workforce and the skills and capabilities that are available in the marketplace. Tax professionals today need a much broader skill set than was necessary in the past. This new reality has profound implications for tax education around the world.

The demand of universities, says Byrnes, is, “How are you going to give us that staff member of the future?” Although he says most universities are considering how to adapt their programs to the future needs of students and employers, it is easier to talk about change than actually bring it about.

Shaking up the ivory tower

Universities can’t afford to ignore the evolution of the tax profession. According to a 2015 report by the Institute of Management Accountants (IMA), which launched a Competency Crisis website to deal with the talent gap in 2013, 90% of North American organizations cannot find the entry-level management accounting and finance talent they need.
The educational curriculum isn’t keeping up with the needs of business, and employers expect more advanced skills at entry level, according to the report. And not just technical skills. Managers surveyed in the report say that “entry-level professionals need leadership capabilities from day one in the workforce.”

Texas A&M University is among the pioneers of change in tax education. In 2013, the State of Texas not only established a new law school at the university but also gave it carte blanche to create a new education model.

A risk management approach to tax means that the new model will by definition be multidisciplinary. Financial and managerial accounting, and law will still be important, of course. But students will also need new “hard” skills involving big data and communications technologies, and “soft” skills geared to working in multicultural settings both at home and abroad.

Employers expect entry-level employees to arrive with these skills already developed. Says Byrnes, “You don’t want to have people who are living in the ‘Stone Age’ (pre-2015) trying to work in a 2016-onward world.”

Educating tax leaders in Europe

In Europe, the lack of any academic infrastructure at all for tax education and research spurred the creation of the EY-sponsored Eucotax Wintercourse program in 1992. The course boasts 13 partner countries (12 from Europe, along with the US) and 15 universities.

It promotes teamwork by emphasizing intense, small group interaction with a focus on a particularly relevant theme.

In 2015, for instance, the theme was the digital economy, which “allowed students to address a wide variety of tax issues in their papers, whether that was VAT, permanent establishment, transfer pricing, and so forth, because the digital economy is having such a broad impact on tax,” says Eric Kemmeren, professor of international taxation and international tax law at Tilburg University in the Netherlands. Kemmeren is one of the coordinating professors of the Eucotax course. Students examine these issues across tax systems, identifying similarities, differences, problems and solutions from the perspective of, say, European law, international tax law and economics.

“We believe we are educating the leaders of the future,” says Kemmeren. A key part of that education is appreciation of different backgrounds and approaches, not only between academia and business but also among people from different geographic parts of the world. Eventually, the program hopes to expand to Latin America, Asia and Africa.

Leading the way in Africa

Initial efforts to revamp tax training in Africa are already under way through the Global Business School Network (GBSN). Established in 2003, the program addresses talent shortages in the developing world.

Africa is interesting for a number of reasons, says Stephan Kuhn, an advisor to the GBSN. It’s big. It’s complex. And some African countries are among the fastest growing economies globally. But it lacks quality management training. “There is a clear correlation between the prosperity of an economy and the quality of management,” says Kuhn.

Which is where the GBSN comes in. The GBSN is a network of 75 leading business schools committed to building skilled management talent in the developing world. Kuhn’s own mission was to bring the same multidisciplinary, practical approach being advocated in the US and Europe to Africa. The next step is to tailor the offerings to Africa.
“While Africa has a tax-technical landscape that is different from Western Europe or America, and it’s important to understand this,” says Kuhn, “equally as important are nontechnical skills: communication, connecting with and understanding business strategy, project and change management, negotiation and so forth.” Case studies are an important tool in this regard — but case studies based on the challenges and experiences of businesses in Africa, not on those from other parts of the world.

Practice-ready graduates

A lack of comprehensive, multidisciplinary tax programs is not just an issue in Africa. Very few universities anywhere offer such programs, says Kuhn. That’s why at home, in Switzerland, he has set up tax courses at the University of St. Gallen to provide students with real, hands-on experience in tackling issues like mergers and acquisitions, transfer pricing, tax evasion, and accounting and compliance.

Indeed, says Eucotax’s Eric Kemmeren, the entire emphasis is away from students who just sit and listen. “We want students to actively participate in the lectures and case studies and to debate the issues.”

Organizations also have a role to play, according to Byrnes of Texas A&M. Employers need to sit down with the academic deans of their feeder schools and make clear the competencies they want to see in the staff they are looking to hire.

A curriculum designed to match actual practice — based on real-world problem solving, group discussion and teamwork — is much harder for professors to develop and execute, acknowledges Byrnes.

Nonetheless, he says, “This is the method that we have presented to big firms who require practice-ready staff able to address the future tax practice, and it resonated.”

Originally published in Issue 15 of EY’s Tax Insights.