Relentless Pursuit of Fairness and Justice in Tax Law:
Interview with Liu Tianyong, Director of Hwuason Law Firm
Founded in 2006 and headquartered in Beijing, Hwuason Law Firm is China’s first ever specialized tax law firm, having been twice crowned as the Tax Law Firm of the Year in 2017 and 2018 by the China Law Award presented by Thomson Reuters ALB. Having its roots firmly in the Chinese market and sticking to its tax specialization have won the firm an excellent reputation in the industry.
Liu Tianyong, Hwuason’s founding partner, is a leading tax lawyer in China who has not only witnessed the development of the Chinese tax lawyer profession from scratch, but also played a vital role in promoting its growth in China.
ALB: Hwuason is the first ever specialized tax law firm in China. As a leading domestic tax lawyer, could you share more about Hwuason and the development of China’s tax lawyer profession?
Liu: The emergence of tax lawyers stems from an objective need for further segmentation of the legal service market, and is also an inevitable development after lawyers find their specialized fields of practice. China’s tax lawyer profession, which has just started out, still lags behind their foreign colleagues, but enjoys broad prospects for development. With fiscal and tax reforms deepening and the legal environment for taxation improving, the enforceability of tax laws is constantly being reinforced, and the demand for tax law services is bound to rise continuously. It can be said that tax-related legal services have now become a new blue ocean on the domestic legal market.
As the first specialized local tax law firm, Hwuason takes pride in being the pioneer in this field. For over a decade, our firm has been intensively working in the field of tax law services based on our development strategy of specialization and local focus, and has served a large number of well-known domestic and foreign companies, solidifying our core competitiveness in terms of our brand and professionalism, and earning consistent recognition from clients and industry peers alike.
ALB: What are some of the key tax law services Hwuason provides for its clients? What are the areas of service that you personally focus on?
Liu: The tax law services provided by Hwuason are mainly tax dispute resolution and tax planning. Apart from internal firm management and external relationship building, I devote more time and energy to tax dispute resolution practice, not only because this service better showcases the professional value of our firm, but also because I hope to capitalize on individual cases to drive forward fairness and justice of tax laws as a whole to realize the social value of tax lawyers.
ALB: What are Hwuason’s competitive edges when it comes to helping clients resolve tax disputes?
Liu: The services we provide for clients in the resolution of tax disputes generally include tax audit response, hearings for tax penalties, administrative reconsideration, administrative litigation representation and defense of tax-related criminal cases. Having a team of lawyers with solid professional expertise and rich experience is the biggest competitive strength of Hwuason. Our highly competent tax lawyers have inter-disciplinary knowledge of not only law but also finance and tax, and boast extensive hands-on experience, making them highly advantageous and competitive choices for clients looking to solve difficult and complex tax-related legal issues. Many of our lawyers are not only frontrunners among domestic tax lawyers, but also have participated extensively in official tax legislation and research work. They are full-fledged tax law experts.
In addition, having a local focus has also enabled Hwuason to develop strong capabilities to integrate social resources and enjoy brand influence. We have a database of expert consultants who are top domestic law professors, and maintain close working relations with the State Administration of Taxation (“SAT”), the Ministry of Finance, the Legislative Affairs Office of the State Council, the Standing Committee of the National People’s Congress and many other central State organs.
ALB: You have led the Hwuason team in many major and difficult domestic tax dispute cases, helping enterprises save huge tax cost and achieve their economic value. Could you share with us a typical case that comes to mind?
Liu: In 2016, a dispute broke out between the foreign-invested enterprise of an internationally renowned auto brand and the Inspection Bureau of the Beijing Municipal Office of the SAT over tax payment related to discount promotion of automobile sales, and the enterprise was ordered to make good unpaid taxes and pay late fines totaling approximately RMB 800 million. After being engaged by the client, Hwuason filed for administrative reconsideration to the SAT on behalf of the client. Our team spent more than six months doing extensive investigation, evidence collection and professional analysis, managed to counter the arguments of the tax authority from the facts of the case to the application of tax laws, fully and meticulously explained to the reconsideration organ our opinions as lawyers, and analyzed how tax rules can be fairly and reasonably applied. This case, which lasted for over one year, ended up with the SAT accepting the view of Hwuason and closing the case by the softer approach of mediation. The Inspection Bureau of the Beijing Municipal Office of the SAT returned all the taxes and late fines collected to the client, and the legitimate rights and interests of our client were effectively and fully protected.
ALB: Hwuason’s teams have acted for many tax-related criminal cases in the past. Could you share with us one of the latest domestic tax-related criminal cases?
Liu: In recent years, the practice of changing the names of the products sold and issuing false value-added tax (“VAT”) invoices has been prevalent in the domestic petrochemical industry. Under the joint supervision of the SAT and the Ministry of Public Security, more than 1,000 petrochemical trading enterprises across the country have entered criminal proceedings for such cases, and most of the parties concerned have been held criminally liable for the crime of falsely issuing special VAT invoices and sentenced to harsh criminal punishments.
We have recently acted for more than a dozen of these cases, and achieved relatively satisfactory results by pleading not guilty for defendants from the two key points of the principle of VAT collection and the constitutive elements of a crime. For example, in a case just closed in February 2018 where an Anhui-based enterprise was suspected of the crime of falsely issuing VAT invoices, the court eventually agreed to the defense opinions of our lawyers, and ruled that the act of changing product names in invoicing did not constitute a crime. The defendant was released in court, and regained personal freedom.
ALB: With over a decade of experience in tax law services, you have participated in and witnessed changes and improvements to the rule of law in China’s tax regime. What are your thoughts on tax laws and the tax law enforcement environment in China?
Liu: Although China’s tax laws are constantly being fine-tuned, there is still a long way to go in rule of law in the tax regime, with many specific rules of tax laws still against the principles of fairness and justice, and many more improvements needed in fully safeguarding the rights and interests of taxpayers. What is encouraging is that China’s tax law enforcement environment is gradually moving towards standardization and institutionalization. In particular, the main channel for resolving tax-related disputes has gradually shifted from coordinating relations to seeking legal remedies. In this context, tax lawyers can expect a broader space to achieve their professional value.
ALB: What are your future development plans for Hwuason?
Liu: Hwuason will continue its focus on tax laws in development, and provide clients with even better and more efficient legal services in response to changes in demand for tax law services. At the same time, we will explore to even further divide our tax law services to more precisely meet the needs of clients. To expand our regional presence, we opened our first branch office in Shenzhen in early 2018. Going forward, we will consider setting up offices in Shanghai and other places to pool together the best tax lawyers across the country and fully expand the domestic tax law service market.
Meanwhile, Hwuason will continue to play its role in leading the development of the tax lawyer profession. After hosting the China Tax Law Forum and the China Tax Lawyer Summer Program for many years in a row, we formally launched Hwuason Institute (edu.huashui.com) at the end of 2017, China’s first online training platform for tax law professionals, with the aim of training a large number of tax lawyers and other new types of tax law professionals to speed up the formation of a tax law professional community in China and promote fairness and justice of tax laws.