Dubai: If you use a tax advisor to file your income taxes, you’re not alone. Even though assets in the UAE are not taxed, expats use tax advisors to manage their investments back home and elsewhere.
Who is a tax advisor? A tax advisor, otherwise known as a tax consultant, is a financial expert with advanced training and knowledge of global accounting principles and tax laws brought into effect worldwide.
He or she is a qualified financial professional who provides advice on strategies to minimise taxes owed while staying within the scope of the law and regulation. This can apply to a business’ VAT (Value-added Tax) or corporate taxes in the UAE, as tax on homes or properties, inheritance or income do not apply.
Tax advisors may be trained as accountants, lawyers, or financial advisors, or may work as a team consisting of two or more types of professionals. They may work for an agency or be self-employed.
How can tax advisors help me? What does their job entail?
Either way, they are tasked with finding efficient ways for clients to legally lower tax liability, compute taxes on diverse investment portfolios, and find the right deductions and credits applicable, etc.
They can also prepare and file tax returns for their clients. Tax advisors also understand the laws regulating business taxes and are, therefore, instrumental in guiding taxpayers on how to comply with tax rules of a country like the UAE.
Among other events, it is most often when a taxpayer who has experienced a major life incident, such as the death of a spouse, marriage, divorce, the birth or adoption of a child, the purchase of a new home, the loss of a job or matters relating to inheritances, hires the services of a tax advisor.
Depending on the taxpayer’s situation, the advice and services a tax advisor renders will differ. An individual planning for retirement will get different advice from an entrepreneur looking to set up shop. Likewise, a real estate investor will probably have a different tax need from a commodity trader.
• Achieve filing goals on or before the established deadline
• Use comprehensive tax knowledge to maximise benefits and deductions
• Build corporate relationships as a business owner and encourage new business
• Educate others on the practices involved in tax filing, preparation, and record-keeping
When all should you surely hire a tax consultant?
Has your tax return gotten just too complicated to handle on your own? Or maybe you just don't have the time to fill out all those forms. It’s time you hire a tax consultant.
A clear instance of you being in dire need of a tax preparer is when, let’s say you owe money in taxes and it has been years since you have filed your tax returns.
A professional tax consultant will also help you leverage any applicable codes to reduce the late penalties and fees associated with filing your taxes late.
If you are the type of person who was hoping to do it all or finding it hard to give someone else the rein over your balance sheets, consider getting advice at least on how to navigate the trickiest of tax terrains.
When all shouldn’t you hire a tax consultant?
Although hiring a consultant or accountant can be the right move for many business owners, there are a few exceptions where it doesn't make sense for a business owner to hire an accountant.
For example, if you are just getting started and haven't made too much business income yet, it may not be time for you to consult with a tax accountant because the benefits may not outweigh the costs.
Let’s say you are a contractor, experts suggest likely waiting until you make about Dh100,000 before you hire a professional to consult about tax strategies and for filing your returns.
However, even though you will hold off on hiring an accountant, you should still be saving some of your money so you can pay for an accountant when the time comes.
If you are a new business owner or investor, you may be wondering how you should approach your taxes. If you are new to taxes, it is key to understand your personal and business finances, and taxes.
If you are in a scenario where it doesn't make sense to hire an accountant at the moment, it's important to stay on top of keeping track of your own expenses and educating yourself as much as you can on tax codes, financial planning and wealth-building by understanding your numbers.
It's important to take advantage of and leverage the tax codes available to you as a business owner because the tax code book is incredibly intricate, and many of the codes are meant for business owners.
Being forward-thinking and setting aside money for future expenses will help you avoid being caught up in the lifestyle creep where you make more money and end up having your lifestyle become more expensive, so you end up spending more money.
The goal is to save money on your taxes and maximise your tax savings as a business owner or long-term investor, and if you hire a tax accountant who understands your industry, you often can.