UAE residents go to tax advisors for help with business’ VAT (Value-added Tax) or corporate taxes in the UAE, as tax on homes or properties, inheritance or income here do not apply. Image Credit: Dreamstime and Shutterstock

Dubai: Even if your income or 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 or a tax consultant, is an expert with advanced training and knowledge of accounting principles and tax laws brought into effect worldwide. He or she is qualified to give advice on strategies to minimise taxes owed while staying within the scope of the law and regulation.

“UAE residents go to tax advisors for help with business’ VAT (Value-added Tax) or corporate taxes in the UAE, as tax on homes or properties, inheritance or income here do not apply,” said Masher Suleiman, a fiscal planning associate based in Abu Dhabi, who deals with overseas tax regulations.

“As trained accountants, lawyers, or financial advisors, they may work as a team consisting of two or more types of professionals, or work for an agency or be self-employed. Regardless, tax experts are traditionally well versed with income tax rules worldwide, which comes of use to savers here.”

How can tax advisors help me?

In other words, they are tasked with finding efficient ways for earners, savers or remitters to legally lower tax liability, compute taxes on diverse investment portfolios, and find the right deductions and credits applicable, etc.

“Tax advisors can also prepare and file tax returns for UAE expats who earn or invest overseas. 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,” he further explained.

“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 have a different tax need from a commodity trader.

Skills and qualifications to look for in a tax preparer
If you need to check the credibility of a potential tax advisor, it is widely recommended that he or she has relevant tax preparation experience of at least three years obtained in the last five years.

Also, he or she should hold at least a certified Bachelor's degree or a Master's degree from a UAE-recognised educational institution, in addition to a valid professional qualification from a recognised institution, as may be prescribed by the UAE’s Federal Tax Authority (FTA).

Required skills and qualifications
• 3 years’ experience in public accounting and/or tax planning and preparation.
• Analytical and problem-solving skills when it comes to diverse tax scenarios.
• Registered and/or licensed with all applicable regional agencies.
• Communication and interpersonal skills, attention to detail.
• Eye to spot errors or mistakes in tax statements.

Preferred skills and qualifications
• Advanced knowledge of relevant software, such as QuickBooks and Microsoft Excel.
• Bachelor’s degree in accounting or finance.
• Familiarity with regional and/or international tax returns.
• Relevant industry certifications (like CPA, CFA, CA, CMA or ACCA).
• Experience representing tax preparers in administrative proceedings.
Depending on the taxpayer’s situation, the advice and services a tax advisor renders will differ.

When should you hire a tax consultant?

According to Brijesh Meti, a CPA qualified overseas tax consultant with nearly three decades experience in handling tax matters, here are some key time when you should 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 shouldn’t you hire a tax consultant?

“Although hiring a tax consultant can be the right move for many business owners or UAE expats sending money home for investment purposes, there are a few exceptions where it doesn't make sense for a business owner to hire an accountant,” said Meti, when listing out the following:

• 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.

• If you are investing in your home country, experts suggest likely waiting until you make about Dh100,000 before you hire a professional to consult about tax strategies and earn Dh10,000 for filing your returns, depending on your rules in your country of citizenship.

• However, even though you will hold off on hiring an accountant or a tax advisor, you should still be saving some of your money, so you can pay for one when the time comes.

Key takeaways

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 understanding your personal and business finances, and taxes.

If you are in a scenario where it doesn't make sense to hire a tax advisor 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 corporate 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.

Bottom line: Why hire a tax preparer?
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. You may also hire a tax advisor or consultant to:

• 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.