DUBAI, UNITED ARAB EMIRATES Ð July 14: Kathy Hyde, Director Marketing of Green Crescent Insurance Company at Royal Mirage hotel in Dubai.  (Pawan Singh / The National) For Personal Finance
Kathy Hyde has not filed her taxes for last year, and has found it difficult to locate local tax preparers who are familiar with the US system.

Uncle Sam always gets his fair share

With its taxation of overseas income, its pension payment requirement for expatriate workers and its levies on global investment gains, the US isn't the best place to hail from if you are living abroad. It is, in fact, one of the worst. As if the fact that Americans have to pay taxes and pension contributions wasn't enough, they also must grapple with figuring out how much they owe, which forms to file and where to send them. When Americans go abroad, the American bureaucracy follows them.

Shoueb Rifai, a 26-year-old American of Syrian descent who works in the financial industry, found out the hard way how confounding the American tax system can be. He moved to the UAE last year, and like many Americans living the tax-free life in Dubai he assumed he didn't need to keep up with the Internal Revenue Service. He has yet to pay his taxes for last year, which were due in June, because he didn't think he had to yet. "I've been filing taxes since 2004, but someone at an embassy reception said you have until October to do it."

Americans do qualify for a foreign income tax exclusion, but it only goes up to US$87,600 (Dh321,763) in earned income ($91,200 for the tax year 2009). And even if Americans don't make that much money overseas, they still have to tell the IRS that they are claiming the exemption by filing Form 2555. And, of course, they still have to pay into the US government-sponsored pension system, which goes by the official name of Social Security.

Kathy Hyde, 40, an American who moved to the UAE 12 years ago with her husband, 42, is another expat who has not filed her taxes for last year. She said it is difficult to find good tax preparers in the UAE who are familiar with the US system, leaving most people to do them on their own. The tax issue can even make it harder for Americans to get jobs overseas, especially with multinational companies that would have to report to the IRS and pay pension and medical taxes on behalf of their employees.

"It makes us extremely uncompetitive in the workforce here becuase we're taxed on our income," she said. "People from most other countries aren't." For Mr Rifai, the US's confusing tax laws add a layer of complication to his already tangled financial picture. For most of his young life, he has not given much thought to his finances. And he hasn't needed to. With a comfortable salary and few debts or other major financial obligations to fret over, he hasn't felt an ounce of guilt about spending all the money he earns - not an uncommon scenario for expatriates in the UAE, whether they are from the US or elsewhere.

Yet over the years, things have spun out of control, and Mr Rifai said he has no clear idea of where he is spending his money or where he could cut back and save. He also plans to get married and start a family soon, which will require more financial discipline than he is accustomed to. "Once the money started pouring in, I started losing track of it," he said. "When I got $5,000 a month, it was $5,000 a month. You start letting go. One thing leads to another, and then forget about it, you're spending your money."

With a long way to go before retirement, Mr Rifai and his wife-to-be have plenty of time to earn more money and start saving for the future. Nick Hodges, a financial planner at NCH Wealth Advisors in Florida, says Mr Rifai's most pressing goal at the moment should be to sort out where he and his fiancée are financially. Without a sense of what they have and how they spend, it will be impossible for them to make the practical moves their situation demands.

"For the next 60 days, they will each record all of their spending," said Mr Hodges, who took a detailed look at the couple's finances. "Each week during that time, they will share the details of their purchases with each other. I told them that this is not to be a time to judge each other, but a time to understand the habits and values of the other." The goal, he said, is primarily a financial one - tracking spending will help them get their financial house in order. But the exercise should help them learn to work together on their finances, which can be a tricky arena for couples to navigate.

"This is an opportunity to have open conversations that will help them understand each other's point of view and to know how best to focus their spending in the future," Mr Hodges said. Once they have figured out where they can cut back on, Mr Hodges advises that they start saving in earnest to build up an emergency fund - a staple of sound financial planning. The rainy-day fund, which Mr Hodges said should be stocked with around six months' worth of salary, is designed to protect the couple in case of dire financial circumstances - if one of them were to lose his or her job, for example.

At that point, building a strong financial foundation becomes all about discipline, Mr Hodges said. Since they're just starting out, he suggests that the young couple take to heart the "pay yourself first" motto, setting aside money for the future whenever they receive their salaries, before they can spend it. Once they have an emergency fund in place, they can start to think about the best places to invest and build wealth.

"I've been planting the roots of a career and finding a well-paying job, and the next step is building a family, and that doesn't work without budgeting and planning," Mr Rifai said. Mrs Hyde and her husband, John, are a little further along in the planning process. The couple, who have two young children, have built up some savings over the years, but they have yet to make any major investments. Staying out of the markets helped them escape the worst part of the financial crisis virtually unscathed, but they realise they also must save and invest more if they are to be prepared for retirement. Since the UAE does not offer any state-sanctioned retirement benefits akin to the 401(k) or Individual Retirement Account in the US, Mr Hodges says planning for retirement is pretty much up to them.

"Since neither of their employers sponsor pension or retirement savings plans, it is very important for Kathy and John to start saving now for retirement," he said. The Hydes should also think about life insurance, Mr Hodges said. They have two young children whom they will need to provide for in the event that one of them dies. Mrs Hyde has a small amount of life insurance through her job at Green Crescent, a health insurance company, and Mr Hodges has none. They cannot take out a US-based policy, because American insurance companies typically do not cover expatriates.

But they can get life insurance through an international firm such as Zurich Life or Friends Provident, both of which operate in the UAE. Mr Hodges recommends a 15-year, $1 million policy for John, plus a $350,000 term policy for Kathy. "This has come at a really good time because we've been procrastinating with the life insurance, saving for college and taxes" Mrs Hyde said. "Really, we're in a perfect position to start making investments and decisions about the future. It was the kick in the rear we needed to get it going."

Mr Rifai said he learned a lot from talking to Mr Hodges, though most of it was fairly obvious in hindsight. He has resolved to cut back on unnecessary expenses and avoid the "careless spending" that he got used to over the years. Sorting out finances and getting organised does not take tremendous effort, but it is a chore many people avoid like the plague because it can mean taking stock of uncomfortable financial realities.

"It's simple things people don't pay attention to," he said. "It's about monitoring things and thinking about the future."


Company: Eco Way
Started: December 2023
Founder: Ivan Kroshnyi
Based: Dubai, UAE
Industry: Electric vehicles
Investors: Bootstrapped with undisclosed funding. Looking to raise funds from outside

It's Monty Python's Crashing Rocket Circus

To the theme tune of the famous zany British comedy TV show, SpaceX has shown exactly what can go wrong when you try to land a rocket.

The two minute video posted on YouTube is a compilation of crashes and explosion as the company, created by billionaire Elon Musk, refined the technique of reusable space flight.

SpaceX is able to land its rockets on land once they have completed the first stage of their mission, and is able to resuse them multiple times - a first for space flight.

But as the video, How Not to Land an Orbital Rocket Booster, demonstrates, it was a case if you fail, try and try again.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”


Company name: Clinicy
Started: 2017
Founders: Prince Mohammed Bin Abdulrahman, Abdullah bin Sulaiman Alobaid and Saud bin Sulaiman Alobaid
Based: Riyadh
Number of staff: 25
Sector: HealthTech
Total funding raised: More than $10 million
Investors: Middle East Venture Partners, Gate Capital, Kafou Group and Fadeed Investment


Ms Al Ameri likes the variety of her job, and the daily environmental challenges she is presented with.

Regular contact with wildlife is the most appealing part of her role at the Environment Agency Abu Dhabi.

She loves to explore new destinations and lives by her motto of being a voice in the world, and not an echo.

She is the youngest of three children, and has a brother and sister.

Her favourite book, Moby Dick by Herman Melville helped inspire her towards a career exploring  the natural world.


Started: 2023
Co-founders: Arto Bendiken and Talal Thabet
Based: Dubai, UAE
Industry: AI
Number of employees: 41
Funding: About $1.7 million
Investors: Self, family and friends


Company name: Revibe
Started: 2022
Founders: Hamza Iraqui and Abdessamad Ben Zakour
Based: UAE
Industry: Refurbished electronics
Funds raised so far: $10m
Investors: Flat6Labs, Resonance and various others

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