I believe that legal compliance and tax efficiency are not mutually exclusive, but rather complementary aspects of deal structuring- Prateek Goyal, Partner (Taxation) at MVKini

This interview has been published by  Priyanka Karwa and The SuperLawyer Team

Can you tell us about your educational background and how you ended up pursuing law after completing your CA and BCom degrees?

I have always been interested in law and used to look up to my seniors/mentors in the family circle who are in this field. As I was pursuing CA, I simultaneously started my law course post my graduation. I believe that my educational background has given me a unique perspective and a competitive edge in the legal field.

You have an impressive range of experience in various sectors, from Fintech to Energy and Infrastructure. What drew you to work in such diverse industries in the field of taxation?

I have always been interested in taxation as a way of understanding how different sectors of the economy operate and interact. I enjoy learning about the specific challenges and opportunities that each industry faces, and how tax policies can affect them. These are dynamic and innovative sectors that have a significant impact on changing the way economy functions and society. I mean we can see the kind of fintech’s getting registered in GIFT City (IFSC) and huge impact that they have in breaking stereotypes, changing the way people understand personal financing or personal investing. It is fast capturing the huge market potential and I think would continue doing that for the time to come.

You’ve handled M&A transactions and tax due diligence for several clients. Could you share a memorable experience where your tax expertise played a critical role in the success of a deal?

It was the most challenging and a steep learning curve of my career when we helped a client acquire a company that had significant tax liabilities. Client wanted to buy the company, but they did not want to inherit the tax problems.

We conducted a thorough tax due diligence on target and identified main areas of exposure and potential solutions. We also assisted in obtaining a clearance certificate that would protect the client from any future claims. We also advised on optimal tax structuring alternatives for the acquisition, taking into account the tax implications thereof.

As a result of our months of hard work, client was able to close the deal with confidence, and saved millions in taxes and penalties. I was very proud of my contribution to this deal, and I received positive feedback from my partners.

I also cherish receiving a commendation from our partner for conducting an internal training on new joinees  on several aspects of M&A.

As a Partner at MVKINI Law Firm, you lead the tax department and manage a team of lawyers and CA’s across multiple offices. How do you ensure effective collaboration and coordination among team members?

It is challenging when team is spread across multiple offices and has different areas of expertise. I try to set clear goals and role profiles of team members, setting the priorities right and most importantly leveraging technology tools, such as video conferencing and cloud platforms, to facilitate effective communication and real time collaboration among team members. It is also important to continuously develop their skill sets through regular trainings particularly in our dynamic and evolving field of taxation.

During your time at Ernst & Young, you worked on advising prospective resolution applicants on acquisitions under the IBC regime. What were some of the most challenging aspects of dealing with distressed undertakings in terms of taxation?

One of the most challenging aspects of dealing with distressed undertakings in terms of taxation was the uncertainty and complexity of the tax implications arising from the resolution process. For instance, we had to assess the tax impact of various structures to implement target acquisition, such as debt restructuring, asset sale, merger or demerger etc. We also had to consider the tax implications of any write-off or waiver of debt, as well as the tax treatment of any losses or unabsorbed depreciation carried forward by the corporate debtor. Furthermore, we had to keep abreast of the evolving regulatory and judicial developments in this area, as there were many unresolved issues and conflicting interpretations regarding the taxation of distressed undertakings under the IBC regime.

From your experience in handling tax litigation and representation before various authorities, what are some key strategies you employ to achieve favorable outcomes for your clients?

It is already well emphasized and there are no two views about it. What is of paramount importance is thoroughly digging and understanding facts of the case. It is also an art to get complete set of facts out from a client and once a lawyer is aware of facts, I would say half the battle is won. Certainly researching and preparing legal arguments and presenting effectively is other part of the coin.

I also prepare clear and persuasive arguments and evidence to support my client’s position and challenge the opposing party’s claims. Also, I believe litigation is not all about fighting only for the sake of it. What I have learnt from my seniors is to not force clients into prolonged litigation and wherever possible seek to resolve the dispute through negotiation or settlement.

You’ve also been involved in assisting FPI clients with Indian tax compliances. Can you share some insights into the specific challenges and considerations that foreign investors face while navigating the Indian tax landscape?

One of the main aspects of my work was to help FPIs comply with the Indian tax laws and regulations be it advisory, compliances or litigation. Some of the challenges and considerations that FPIs face while investing in India are:

– The classification of FPIs into different categories given their unique structures in their home jurisdiction and navigating the same into Indian jurisprudence based on tax treaties

– The withholding tax obligations on various types of income, such as dividends, interest, capital gains, and royalties, and the availability of tax treaties and lower rates for certain jurisdictions.

– The reporting and documentation requirements for FPIs, such as filing of tax returns, furnishing of certificates, and maintaining of books of accounts and records. I witnessed how EY was a flagbearer in implementing automated processes for doing these tasks and the amount of effort and investment that went into doing so.

– The risk of tax audits, assessments, and disputes by the Indian tax authorities, and the options for resolution and appeal.

With a substantial background in IBC litigation and commercial arbitration, what advice would you give to businesses or individuals who may find themselves in insolvency situations?

Insolvency situations are complex and challenging for any business or individual, and they require careful planning and professional guidance. My advice would be to seek legal assistance as soon as possible, and to explore all the available options for resolving the insolvency, such as restructuring, settlement, liquidation, or bankruptcy. I would also advise them to cooperate with the creditors and the insolvency resolution professionals, and to comply with the relevant laws and regulations. Additionally, I would suggest them to consider the benefits of alternative dispute resolution methods, such as arbitration or mediation, which can help them avoid lengthy and costly litigation, and achieve a more satisfactory and amicable outcome.

Having worked in both corporate law and tax advisory roles, how do you strike a balance between legal compliance and tax efficiency when structuring deals for clients?

As a legal and tax advisor, I always aim to provide solutions that are both compliant with the relevant laws and regulations and efficient in terms of tax implications for the clients. I believe that legal compliance and tax efficiency are not mutually exclusive, but rather complementary aspects of deal structuring. To achieve this balance, I follow a few principles:

– First, I always start with a thorough analysis of the client’s objectives, needs and preferences, as well as the specific facts and circumstances of the deal. This helps me to understand the scope and complexity of the issues involved and to identify the potential risks and opportunities.

– Second, I research and evaluate the applicable legal and tax frameworks, both domestic and international, that govern the deal. I also keep abreast of the latest developments and trends in the relevant fields, such as new legislation, case law, guidance and best practices.

– Third, I design and propose solutions that are tailored to the client’s situation and goals, taking into account the legal and tax implications of each option. I also communicate clearly and effectively with the client, explaining the pros and cons of each solution, as well as the assumptions, limitations and caveats involved.

– Fourth, I collaborate and coordinate with other professionals, such as lawyers, accountants, bankers and consultants, who may have different perspectives and expertise on the deal.

– Fifth, I monitor and review the implementation and execution of the deal and provide ongoing support and advice to the client, in case of any changes or issues that may arise after the deal is closed.

Throughout your career, you’ve worked with clients from various sectors and industries. How do you stay updated with the ever-changing tax laws and regulations to provide the best possible advice to your clients?

That’s a great question but I am afraid my answer not any different. It is 3R’s – READ, READ and READ

I think it’s very important to keep up with the latest tax rules and trends, especially in this dynamic and complex environment. You need to subscribe to knowledge databases, newsletters and podcasts from reputable sources that cover tax news and analysis, follow some influential tax experts on social media and blogs, attend regular webinars and workshops that offer updates and insights on various tax topics and issues. What is also understated is consulting with fellow colleagues or mentors if you have any doubts or questions who are always welcoming and provide different perspectives which you might have just not thought about. In fact, I also sometime try to find time to share my knowledge with extended family on LinkedIn by sharing my analysis on latest tax controversies and new legislations.

As someone who has achieved considerable success in your field, what advice would you like to give to fresh law graduates who are just starting their careers in the legal profession, especially those interested in taxation?

Don’t stop asking questions and learning new stuff. Tax law is tricky and always changing, so you gotta keep your curiosity and your brain sharp. Look for ways to learn more, like taking courses, going to events, and reading a lot. Get your hands dirty, try to get as much real-world experience as you can, through internships, jobs, or whatever. This will help you improve your skills and meet people who can help you out.

Money should be secondary as your career just starts and I strongly discourage  this tendency nowadays to switch jobs in name of ‘climbing the ladder’ or taking a ‘steep curve’.

A good mentor can help you navigate the tough times (which very often comes in this field), so find one and discuss whenever in doubt. Also, I do believe, everyone has their own set of challenges and pace, so relax and avoid self-comparing tendencies. There is this poem which was introduced to me by our CA-IDT class professor, Mr Ajay Jain – DON’T QUIT

“When things go wrong, as they sometimes will,

When the road you’re trudging seems all uphill,

When the funds are low and the debts are high,

And you want to smile, but you have to sigh,

When care is pressing you down a bit,

Rest, if you must, but don’t you quit.”

(Read on, if you must..)

Get in touch with Prateek Goyal-

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