Expatriate Executive: Dubai

In Dubai there are no personal taxes other than import duties (mostly at rates up to 10%), a 5% residential tax assessed on rental value, and a 5% tax on hotel services and entertainment.

Offshore Investment Opportunities

It is clear from the above that an resident expatriate working in or from Dubai is in a good position to acquire and maintain offshore assets, including assets in Dubai.

Dubai itself has a thriving financial sector. At the end of June 2010, the UAE had over 800 domestic banks, including 699 branches, 23 head offices, 76 pay offices, and 26 electronic banking services units; and over 100 foreign banks including 82 branches and 28 head offices. Bank deposits of more than AED651.5 billion were recorded in the UAE by the Central Bank in 2007. This had increased to more than AED867 billion by the end of September 2008 and to AED985bn by the end of June 2010.

Many of the foreign banks in Dubai are established in the Dubai International Finance Centre. Asset management companies, banks, and other financial service providers which establish headquarters in the Dubai International Financial Centre (DIFC) are permitted to do business with locally-based high net worth individuals. DIFC Regulatory Authority chief executive, Phillip Thorpe explained in October, 2002, that although DIFC-based firms will not be allowed to enter into the retail market in Dubai, they would be permitted to deal with individuals whose net worth exceeds AED5 million.

The Dubai International Financial Exchange (DIFX) opened for trading for the first time on Monday 26th September, 2005.

The DIFX rebranded its market as NASDAQ Dubai, effective from November 18, 2008. NASDAQ OMX Group, the world's largest exchange company, also listed its shares on NASDAQ Dubai on November 20.

Both moves reflect the growing links between NASDAQ OMX Group and NASDAQ Dubai, as well as the growth of Dubai as an international financial centre.

Soud Ba'alawy, Chairman of NASDAQ Dubai and a Director of NASDAQ OMX Group, said, "As the international stock exchange serving this region, NASDAQ Dubai acts as a capital markets gateway for investors all over the world, including and especially in this region. NASDAQ Dubai's growing ties to NASDAQ OMX exchanges in the US and Europe in listings, marketing, technology, and management expertise will support its continuing expansion."

NASDAQ OMX acquired a one-third stake in NASDAQ Dubai in February 2008. The other two-thirds is owned by Borse Dubai.

2008 was a successful year for the DIFX, albeit from a low base. There was a 117% increase in trading volume in 2008 compared to 2007, to 2.39 billion. The number of trades increased by 281% to 28,862. New listings included two IPOs by Depa Ltd and Damas Ltd, five secondary listings, 132 derivative contracts, one structured product and 9 sukuk. Equities trading volumes on the Nasdaq Dubai exchange rose by 30% in 2009 to 3.10 billion shares.

In choosing between various types of offshore asset for investment purposes, the main consideration for a Dubai-based expatriate will be his or her intended residential plans following departure from Dubai. If the expatriate plans to move on to another offshore jurisdiction, then investment choices will not be much constrained, but if the plan is to return to a high-tax jurisdiction, then it is vital to study the anti-avoidance legislation of that jurisdiction before acquiring offshore assets. Some jurisdictions tax offshore assets more severely than domestic assets and 'look through' trust arrangements, while others accept trust assets as being outwith the tax net.

This DIY guide can be used to explore high-tax country tax regimes for residents by specifying 'high-tax country name' and 'high-tax country resident intending to stay put'.

www.lowtax.net contains extensive information on the investment, tax and legal regimes in 50 of the main offshore jurisdictions. Further information is available in our Investment Information Providers Section, and the four main types of offshore investment are described in the Guide to Offshore Investment on this site.

NB: The suggestions given above do not constitute investment advice. They are intended only to assist individuals in finding appropriate professional advice, which is essential for anyone planning offshore investment.