Team shortlist01 Feb 2016 AT 09:14 AM

Are we going to be taxed in the UAE?

Your questions answered
Team shortlist01 Feb 2016 AT 09:14 AM
Are we going to be taxed in the UAE?

There are all sorts of rumours flying around about tax being introduced to the UAE. But let’s not get ahead of ourselves – it’s not quite as dramatic as some people are making out. For a start, it’s at least a few years off, and secondly, it won’t be similar to the taxation in many UAE expat’s home countries. Let’s deal with some of those lingering questions that you may have.

Give it to me straight. Am I going to have to start paying tax here?
Yes. No. Sort of.

Well, I keep hearing rumours the UAE is planning to tax people...
There are, of course, many different kinds of tax. The good news is that the biggest one, income tax, is absolutely not going to happen in the UAE. People in the UK pay as much as 40 percent of their salary in tax. You pay zero. And you will continue to always pay zero – the government has made that clear.

That’s a relief. So I can carry on spending my cash like crazy...?
For now. Although it looks like VAT will be introduced on what you spend it on. Although that won’t apply to healthcare, education, service sectors and around 94 specially selected food items. But everything else will likely have a percentage tax on top of it, pushing prices up.

Disaster. I mean, VAT is 18.5 percent or something in the UK?
Fear not. Talk is that VAT levels will be around 5 percent.

Okay. That’s not too bad. When does this all kick in?
Not for a while. It looks like VAT will not just be in the UAE but imposed across the Gulf. So the earliest any new law could come in would be 2018. And after that it takes around 18 months to implement. Realistically, nothing will happen before 2020.

We can breathe out for a bit... unless there are other taxes?
The UAE is also looking at putting taxes on remittances. So if you are wiring a load of cash back to your home country, some of that might have to go to the government as tax.

Oh, no. From when?
This one is just an initial idea. It may never happen. And even if it does, probably not before 2022.

Am I better off moving to somewhere else in the GCC?
Definitely not. All other GCC countries are looking at ways to introduce taxation. Kuwait is even thinking about income tax. 

Why is all this tax talk now?
Oil prices are super low, meaning governments in this part of the world are not making as much money as they’d like on oil sales.

So, I need to earn more and save more, basically?
You should do those anyway. But none of the new taxes are likely to happen in the next four years. Given the average stay here is three years, you will probably be paying tax back home by then.

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