Question about Dubai

Society Business and Career
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An old college friend of mine is living in Dubai, has his own recruitment firm. We’re friends but we also chat about the Finance industry from time to time. He mentioned something that I want to clarify:

  • If you are a non-UAE citizen (say US citizen) you will not have to pay any income tax yet file taxes in your “home” country. Is this accurate?

More importantly, he mentioned a few interesting HF opportunities for me, where I (Swiss Citizen but also hold Pak. passport) could save significant dollars in taxes if I were to:

  • Work for a firm based on my Pakistani citizenship. Have to file taxes in Pakistan (a pittance compared to Swissland) and keep more of the bonus in my pocket? I’m intrigued but skeptical. Anyone, particularly Dubai based or working in Finance/I-Banking have any thoughts?

If I pay income taxes to Pakistan, I don’t mind, but I don’t want to be on Interpol’s hit list either.

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Re: Question about Dubai

Also, i wanted to mention that dual nationality is very much permitted under Swiss law.

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Re: Question about Dubai

pak-one it depends on your home country tax laws. in UK it was the case and i believe it still is that if you are out for more than 6 months u are classified as a non resident and pay no taxes.

in US citizens and residents case, u have to pay taxes no matter where you are. fist 80K is tax free then u pay taxes, which is nice, but under new laws any perks and non cash benefits like kids education, subsidised housing, etc become taxable too. i think US is among a handful of counries that have this situation.

Finding my heritage ..
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Thanks. Do you have any information about the Pakistani citizenship situation? If I declare my nationality as Pakistani while working in Dubai, I would presumably fall under the home country tax laws, which would be Pakistan. I wouldn't mind filing taxes for Pakistan.

Despite being based out of the US, i am exempt from income taxes due to the tax treaty with Switzerland, which is under negotiation this year. I'm more than happy to pay Swiss taxes because I fall under the "Swiss abroad" category which caps the income tax amount and is much more reasonable.

I'm sorry but the US tax codes seem ludicrous when compared to the European standards, even the UK income tax situation seems better. I mean most of my American friends and associates in Dubai would easily break that $80K threshold on base alone. Also under the current administration, I would imagine that the tax rate of bonuses and other extra compensation will only increase. What a bad deal!

The plot thickens...

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Re: Question about Dubai

no idea bro, dont have pak citizenship so never looked into it.
the US tax code on expats in pretty ridiculous, it makes US expats expensive and thus opportunities get limited abroad.
I have turned down opportuniries in middle east because net net the increase I was getting was simply not worth uprooting and moving over.

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No problem. My family has mostly maintained Pak. citizenship when possible.

Exactly my point. US citizenship seems restrictive in that aspect. I mean after you do the after tax calculations, relocation costs, lifestyle adjustments it doesn't make sense for US expats. Not having family, I have a bit relocation flexibility..but for folks with kids, education also becomes an expensive proposition.

The sad part is that if you're an Expat doing ok in Dubai, you're subsidizing the US without getting any direct benefit out of it. I mean yes you have the migration flexibility afforded by the US passport, but that flexibility is available for EU/UK/Swiss nationals as well.

This whole change to the US-Swiss tax treaty along with some very lucrative opportunities in Dubai, are really making me think twice about making a shift.

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Re: Question about Dubai

This sound more complicated when you're trying to figure out these things with respect to the multiple citizenships and residencies that you hold.

I'm just wondering whether simply "declaring" your Pakistani citizenship is going to suffice in a case when you wish to pay taxes in Pakistan. Don't you have to show that you've maintained residency in Pakistan for x number of years before you started working in the Emirates?

In the Canadian context, there are various categories of residency that need to be acknowledged by the tax payer and approved by the Revenue Agency to determine the tax paying situation. I think we have the Factual-Resident, Non-Resident and Deemed-Non-Resident categories... and each has its own provisions.

Treaties can simplify things greatly though - I think Canada had its treaty with the Emirates a few years back which is why we've seen quite a few people take advantage of opportunities there.

Manzar Kashi Competition - 3
Manzar Kashi Competition - 3
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This is an entirely new world for me. Yes, you are definitely right about things getting complicated. With respect to the US, I chose to go with the Swiss Citizenship to avoid the grief that our poor Pakistani countrymen have to go through..it's amazing how Americans treat Swiss national even though we are not EU citizens. Plus the tax treaty made the difference. Sure I'm paying Swiss but on a personal level I *believe *in Swissland just like I believe in Pak.

I'm going to speak with a few people in Dubai about this matter. As you can imagine, I can't exactly go to the consul for this information because of competing nationalities.

You raise a good point about Pakistani citizenship, but theoretically a Pakistani citizen could have migrated to US/UK then shifted to Dubai all while maintaining his green passport? Also, I am curious to whether the Emirates have this "residency" requirement or my potential employer? If they stipulate a residency requirement than I would be in real trouble because I have not been a continuous resident of Pak/Swiss although my parents have property in both nations so I have a permanent domicile in both.

Switzerland has triple citizenship which means that you're not only a citizen of the Swiss confederation but also the canton and community. In fact even while abroad your taxes are channeled to the Canton/Community level, which is great because your supporting your "home" canton, in my case, Zurich.

I definitely want to pay income taxes, but after years of supporting Switzerland, I want to switch to Pakistan. Hopefully this can be done in the proper legal manner.

~For BOYS~
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Wouldn't you get the "Pakistani pay rate" if you were to go there as a Pakistani rather then a Swiss?

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Why would I get a Pakistani pay rate when I was educated at one of the top universities in the world, have a proven track record across two major business fields with de facto industry leaders? Also the fact that much of the real income is tied to performance based bonuses, that company would be a fool to even think of a "Pakistani pay rate."

Lastly, the position has to be lucrative enough for me to pretty much uproot my life and shift to another country. Significant tax saving, added bonus potential along with the possibility of making partner at the fund would be some of the compelling reasons to make the shift. Unlike many other people who are moving to Dubai/Gulf because of being downsized, not wanting to have their kids grow up in the West, or some other reason..I'm looking for more money in my pocket/greater responsibility and freedom in my career.

My friend who has done well with his firm (Mashallah) is more of a religious fellow then I am, so has brought his current condo full cash, owns a small hotel in Lebanon, a house in the US. he is also a silent partner in many smaller enterprises. Since he doesn't do mortgages, he keeps plowing the money into real estate, businesses. his success comes from the fact that he does not have to worry about taxes.

As X2 mentioned after $80K in base salary, the US hits pretty hard with the taxes. Bonuses can be taxed up to 50%. Say you bring in $80k in base and another $100K in bonuses...your take home ends up as $60K base and $50K bonus (I'm ballparking here and I'm not a US citizen). So think about what that extra $70K will do for you? I would rather invest in self directed investment vehicles.

On the flip side there are many drawbacks. I mean we all need to consider family circumstances, friends and even professional networks. Like i said, being single and fairly international I'm somewhat more flexible. Even then, a place like Dubai would be isolating for me, so expect multiple trips to visit my parents, relatives which increases my travel costs. So everyone needs to make their own assessments.

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Re: Question about Dubai

Hi

I believe you need not to pay any tax in Pakistan as well, if you become non resident after spending more then 6 month of a year oversea.

Your friend might be talking about professionals working for UAE businesses but spending bulk of their time in Pakistan they would obviously come into Pakistan tax net.

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Thanks - this is good advice.

I have my Pakistani passport and identity card in good order (thank you Pakistan :))

Timepass - March 2014