On April 1, Big Four accounting firm will hire more than 600 of US multinational GE’s tax team worldwide in a deal that PwC describes as “an opportunity that recognizes the future needs of a rapidly changing marketplace.”
The arrangement could serve as a model for businesses with large (and expensive) tax teams whose CFO is looking to optimize spending without affecting quality of work. By exchanging fixed costs for variable managed services costs, the company evidently hopes to realize cost savings. GE files more than 5,500 tax returns every year in some 300 jurisdictions.
From the point of view of service providers like PwC, the mass transfer of experienced tax talent is a positive as international tax rules and practices are being overhauled by the Action Plan on Base Erosion and Profit Shifting of the OECD and G20 countries.
It gets to keep GE as a client and gains a new team of well-regarded lawyers and accountants that can potentially expand its tax business – assuming the accounting firm can successfully absorb and energize a tax team used to the perks and culture of a corporate behemoth.
“The agreement allows us continued access to the world-class expertise of global leaders along with the flexibility to scale to the requirements of the changing GE portfolio,” said Mike Gosk, GE vice president and senior tax counsel, in a media release.
“We are pleased to advance our longtime relationship with PwC in a way that provides an opportunity for other leading companies to tap into the world’s best tax team while providing outstanding career opportunities for those legacy GE professionals.”
For his part, PwC Vice Chairman and Managing Partner Mark Mendola observed: “The caliber of talent joining our firm from GE is remarkable. This arrangement will enable us to continue providing our clients with the very best tax services in an increasingly volatile and uncertain environment.”
PwC says it already has the largest tax practice in the US and the world, with a global network of 41,000 tax professionals operating in 157 countries. The former GE tax specialists, to be known as the Global Enterprise Tax Solutions team, will sit within the PwC Tax unit and provide managed services to GE and other PwC clients.
GE’s managed services contract with PwC runs for five years and renewable thereafter. About half of the GE team are based in the US, with the rest assigned in some 40 other countries.