Expatriate Tax Planning In UAE

The UAE does not levy any income tax or social security tax on foreign workers, which makes it one of the few truly tax-free states in the world.

Nonetheless, this doesn't always mean you won't pay any tax on your UAE earnings. Many countries tax their citizens on their worldwide income. Others make it very difficult for you to be classified as non-resident for tax purposes. Still others, like Australia, regards income earnt in a country with no Individual Income Tax Regime (such as United Arab Emirates) as fully assessable for their local tax. With Australias top tax bracket at 45%, this can be a huge hit to your earnings.

Understanding your tax residency in UAE is a crucial. If you plan carefully you can take full advantage of the lack of income taxes. But something as simple as an error on your immigration card when leaving your country can have huge ramifications. Your options for expatriate tax planning in UAE can be split up pretty simply as organising everything yourself, getting your employer to organise things for you, or getting professional assistance

Expatriate Tax Planning In UAE

Organising your taxes in UAE on your own

Not only is the Tax system in UAE dense, it’s updated regularly… meaning you’ll need to do a lot of studying if you want to organise your own taxes.

Generally, a taxpayer is any person who:

  • Is domiciled in UAE;
  • Has resided in UAE for 183 days or more;
  • Derives income from sources in UAE.

As an independent contractor, you may be eligible for certain tax advantages (or liable for taxation in other ways). You may not need to pay any taxes in UAE at all. And, of course, you’re going to need to sort out what you owe in your home country.

Most people need some sort of specialist advice to begin understanding their tax liability in these situations. However, even after understanding what’s required of you, you will likely need to spend hours going over the return in meticulous detail.

Can employers organise UAE expatriate taxation?

Your employer can handle expatriate taxes in UAE for you, because there aren't any! But you should check with them if they will also help you with your tax affairs in your home country. If you do find a company that will put you on payroll and handle your home taxes, then you have to do next to nothing to organise your tax affairs. Unfortunately, many companies don't offer services like these for temporary workers. 

Are there any other options for expatriate tax in UAE?

Many contractors choose to work under an Umbrella Company.

An Umbrella Company will calculate what you owe in taxes and fees, and process your payments. They act as your “employer,” although you still work exactly like you would as a contractor.

This allows you to pay as you earn, similar to having an employer or client organise your taxes. In this scenario, however, you don’t have to worry about who’s going to organise your taxes each time you take on a new contract. 

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