Tax, Finances and the Cost of Living in Dubai

As you well know, moving abroad is a very complex undertaking.  At the concept and the outset it seems nothing but excitement and opportunity all the way.  Then the reality of having to practically put the elements into place for a new life in an unfamiliar country comes into play, and all of a sudden it’s sleepless nights and worry!

If you’re thinking about moving to live in Dubai and you’re looking around for practical help and guidance, don’t stress, because we at Shelter Offshore, with a little help from our friends at Halifax International, can help you.  In this report we will cover tax, finances and the cost of living in Dubai.  You need to have all the information to hand that you can find out about your new nation, so that you can sleep easier at night and know that you know all there is to know!

Halifax International are producing mini guides to nations of particular interest to expats, and one of the countries they’re covering is Dubai.  In this report into everything to do with money and life in Dubai, we draw on some of their top tips as well as including many of our own.

How Expats Manage Tax When Living in Dubai

Tax is taxing even in one’s own country.  Presented with an unfamiliar system the problems are often compounded, and when you add in the fact that some people who work in Dubai are not full time residents and therefore are potentially liable to pay tax in more than one country, it gets very confusing!
However, one of the key reasons behind the general expat fascination with the entire U.A.E is because it doesn’t levy tax on personal income earned in any of the emirates such as Dubai.  There are also no withholding taxes – such as dividends, interest or royalties either.  Whilst currently there is also no VAT in the emirate, the U.A.E as a whole is planning the introduction of VAT in the near future.  So far so good, all this means that potentially, expatriates can live and work and earn in Dubai and pay no tax whatsoever.
However, firstly you have to notify the taxman at the Inland Revenue about your departure from the UK so that you can officially become non-resident for income tax purposes in Britain, then you have to make sure you tell the National Insurance Contributions Service about your impending move too. 

The latter is important to do as the NI office should be able to inform you of whether your pension is payable abroad (if you’re moving to retire to Dubai), and whether your NI contributions should actually continue if you’re only going overseas for a short period perhaps.  People often believe that by upping and leaving they can avoid all British tax payments, however in some cases they might actually be missing out on a sizable tax rebate if they do.  If you are eligible to continue making NI contributions, and if your accountant or tax adviser deems it worthwhile, think about how this might affect your eligibility to the UK state pension in later life for example.

How Expats Should Get Their Finances in Order Before They Move to Dubai

Before you make the decision to emigrate, it’s essential to ensure your finances are properly planned and that realistic budgets are in place to help you move and to help you cope once you have relocated.
The first thing to think about is managing your day-to-day banking.  To remain known in the UK by financial institutions and retain your credit rating, many people opt to leave their UK bank accounts open, especially if regular payments such as transferring UK pensions or rental returns from a UK property, are to be made from there.  An offshore savings account or offshore bank account may also be beneficial for long-term savings and for tax planning purposes.

Offshore savings can be held in various worldwide currencies, however you will also need to open a local bank account when you arrive in Dubai as this is mandatory for salary transfers when you live and work in the UAE.  With a great selection of top international banks with local product offerings, as well as a range of UAE banks, there is plenty of choice for expats moving to Dubai.
Handsome remuneration packages are often one of the plus points of relocating, and since you’ll be legitimately spared from paying tax on your income when you move to Dubai and establish tax residency there, it’s a saving that can be utilised if you save and invest wisely.

Financial advice is widely available in the U.A.E, but for reputable and qualified assistance make sure the individual is licensed by the Central Bank of Dubai.  Considering a financial advisory with a global reach will however give you the capacity to manage your affairs should you wish to relocate again or repatriate, without having to go through the often onerous process of setting up foreign accounts again and establishing another relationship with another financial adviser.  Contact us if you want to speak to an advisory that specialises in assisting expatriates and which has global reach.

What’s the Cost of Living in Dubai?

And finally, Dubai is an expensive city, there are no two ways about it!  The cost of living has spiralled over the past five years owing to rising house prices, rental rates and general inflation, so this should be factored in when thinking about moving to live in the emirate.  Living accommodation is particularly expensive as is private education if you still have children who are studying.  If you are negotiating a ‘package’ with your employers before moving out to Dubai, keep in mind that the cost of living for a western expat is at least as high as it is in Central London.

We hope that you have found the above information useful.  If you want more information about arranging finances when living in Dubai, contact us, of visit Halifax International’s website for information about the products they offer to expatriates.  Please note, we are not affiliated with Halifax International.