Expatriate Tax Saving and Living in Dubai

A guide to the taxes levied in Dubai and how expatriates living in Dubai can save and invest their tax free income wisely

One of the main reasons people are attracted to Dubai is because the emirate does not levy tax on personal income earned in the emirate.  Lots of expats and would-be expats feel that earning a tax free income will stand them in good stead in terms of getting ahead financially speaking.

It’s true that if you are in a position as an expat to save tax legitimately you can make the most of this by intensively banking and saving during your sojourn overseas…and in this article we’ll cover expatriate tax saving and living in Dubai as well as details about which taxes are levied, and how you can potentially make best use of your excellent salary!

You just need to bear in mind from the outset that many who intend to live and work abroad, and who are either saving tax and/or earning a better salary as a result, have great intentions before they move, but then upwardly enhance their lifestyle to match their salary and forget to do anything with their new found wealth apart from spend it!  Don’t fall into the same trap!

As stated, Dubai in the United Arab Emirates does not levy tax on personal income and there are no withholding taxes either.  At the time of writing there is also no VAT in the emirate, although the UAE as a whole is planning the introduction of VAT in the near future.  The only taxes that you’re probably going to be liable for in Dubai are a 5% ‘council’ tax if you’re in rental accommodation, 30% taxation on alcohol (ouch), a 10% form of tax on food and drink bought at hotels and a further 10% ‘council’ or municipality tax paid by everyone regardless of whether they rent or own property in Dubai.

Whether or not you have some liability to pay tax to any other nation depends on your own personal circumstances.  For example, if you have property abroad that you rent out and earn an income from, there could be a taxable charge on that income in the nation the property is located in.  Your best bet is to speak to an accountant – and don’t forget to inform your former local tax authority of the fact that you are leaving the country to go and live and work in Dubai so that you are no longer classed as resident for tax purposes in the former country.

So, you are likely to be saving tax on your income when you move to Dubai, and chances are you will be being remunerated quite handsomely as a result of your relocation.  Therefore as an expatriate you’re clearly saving tax – and that saved tax in the form of extra salary can be utilised if you save and invest wisely.  You can take financial advice when you’re in Dubai, but make sure the individual giving you the advice is licensed by the Central Bank of Dubai to give qualified and regulated financial assistance.  Consider using an independent financial adviser as well, that way you have access to the whole marketplace of investment products rather than being tied to one bank or institution’s products.  Also, think about using a financial advisory which has global reach and which can continue to manage your financial affairs when it comes time to relocate again or repatriate.

Finally, look at all the offshore options you have as well as the onshore ones, and commit to saving as much as you comfortably can whilst you’re living abroad so that you make the most of your time financially speaking, and go home better off and having broadened your horizons!