The Middle East has emerged as a financial and professional hub attracting ex-pat workers from around the world. The predominant industries are power, oil and gas, technology, pharmaceuticals, construction and healthcare. So, this creates opportunities for engineers, medical professionals, IT specialists and financial executives.
In addition, you will find cultural variety, delicious cuisine, modern infrastructure and many ex-pat communities. If the Middle East is your preferred destination, you will need some practical framework for targeting a specific country or company.
How to select the best country in the Middle East for you?
Most work in the Middle East will be found with recruiters that specialize in the region, or directly with a target company. The best country may end up being the one where you receive the best offer, and the potential for retained earnings.
The climate will be fairly consistent and Arab language and culture will be found in every Middle Eastern country, including Israel. So, the choice may come down to where your skills are in demand, rates of pay and cost of living. Many countries like the UAE have no income tax, so that could also be a big factor compared to EU tax rates of 50% or more.
Work visas are approved following a detailed and rigorous process, and sponsorship is essential. There are no self-employment visas on offer, and unless you are ready to meet business startup requirements, you will have to rely on your client for a visa. This may mean becoming an employee and will depend on their willingness to sponsor a contractor.
The cost of living can vary quite a bit between countries. However, in general, rates of pay should be on pace with living expenses. You can spend as much on rent in Dubai as you would in New York or London, but there are affordable options as well. When you receive an offer, it’s a good idea to research the cost of living before accepting.
Examples of Middle East Countries for Contractors.
United Arab Emirates (UAE)
Perhaps the most appealing country to work in the Middle East is the UAE. The population is 85% ex-pats which underscores how many have taken advantage of the vast opportunities. Dubai and Abu Dhabi in particular offer work in many specialized fields, with a modern lifestyle that is world-renowned.
There is no income tax in UAE so that is one additional incentive for ex-pats who see it as a tax haven. You might still have to pay tax at home, and will want to obtain the valued tax residency certificate to confirm your status. Dubai also has free trade zones that focus on IT, media and construction, where companies don’t pay any income tax as well. All of this adds up to a robust international economy that favours investment and business.
One thing to know is that landlords in UAE may ask for a year’s rent upfront, so that will have to be accounted for in your moving budget. Even if you go the employee route and receive a housing allowance, that would only be paid out monthly.
If you are searching for clients in Israel, there is one advantage for contractors. You can register as self-employed (Katzman), to avoid any employee-type relationship with your client. This involves registering with multiple agencies, which will confirm your status. Social security payments are required at 5.97% to 17.83%, and income tax rates are 10% to 47%. There is also a VAT payment required if you are working as self-employed.
Israel will declare you to be a tax resident after 183 days in the year, but unlike many countries, you won’t pay tax on global income for the first 10 years. Income tax rates are the same for residents and non-residents so there is no real effect. There are no self-employment visas except for the Innovation Visa for entrepreneurs. So, you might have to look to your client or an umbrella company for visa sponsorship.
Qatar, like UAE, has a population that is primarily ex-pat workers and families, with around 1.5 million filled jobs. The petrochemical industry is dominant, and Qatar has no income tax which adds to the attraction. Although the ex-pat population is high, culture shock may be an issue for some contractors. If you are contracting for less than three months, you can do so with a business visa. Otherwise, a work permit will need to be sponsored by your client.
Saudi Arabia is another country rich in oil and gas, so that will be the primary industry. Despite its large geographic size and vast oil reserves, its GDP does lag other smaller Middle Eastern countries. As an ex-pat, you will find it difficult to obtain a tourist visa to conduct a job search. Therefore, you must secure your client from outside the country. Most ex-pats have their work visas arranged by their Saudi sponsor before arriving in the country.
Saudi Arabia uses the standard 183-day rule for tax residency unless you have a permanent residence and then it is 30 days in a year. And, like in UAE, there is no personal income tax levied on earnings for tax residents. Ironically, non-residents (less than 183 days) who derive income from Saudi Arabia are subject to tax withholding of 5-20%.
How can Contractor Taxation help you with international contracting?
Contractor Taxation has a network of umbrella companies across the Middle East that are ready to help you with client payments, tax withholding and compliance. Because each country is different, the local umbrella company will know exactly how to assist you with your contracts and availing of various tax and self-employment programs.
Other benefits of umbrella companies include:
- Manages all client payments, tax withholding and any social contributions
- Issues you a payslip each month, to a local or foreign account
- Sponsors work permits
- Helps set up the contract with the client
- Moderates any disputes with your client
- Advises on access to totalization and double taxation treaties
If you have questions about how an umbrella company can help you as an international contractor, please contact us at Contractor Taxation.