UAE Living Costs Eat Into Tax-Free Income, Study Says

By Haruna Kobayashi, for 28 November, 2014

Professionals expecting to earn high tax-free salaries as expats in the UAE have been told that they need to be aware that the country's cost of living will eat into their income.

The warning comes in a report from the Economist Intelligence Unit (EIU), entitled UAE Expats and the Bottom Line. The EIU says that the rental market is heating up due to new down-payment rules that have put property purchase out of reach for many professional expats, and that the country is one of the world's most expensive locations for international schooling.

The report explains that the UAE has a dearth of mid-range properties, which forces many expats to take pricier accommodation. Prices for some high-end accommodation have returned to their 2008 peak and some districts of Dubai have seen rents rise by over ten percent a quarter.

Meanwhile, education fees are to continue to rise, for the most part by between 1.7 percent and 3.5 percent, but in some cases by up to 7 percent, the report says. At the same time, employers are now said to be less likely to include education benefits in remuneration packages.

The report says that some expatriates have reconsidered the length of their stay in the UAE due to the increasing cost of education, especially at secondary-school level.

There are also various other charges, fees, and indirect taxes to be aware of, as well as a consumerist environment that the authors suggest "challenges the financial discipline of some expatriates."

The report also warns that expats who get into debt may face a travel ban until their liabilities are cleared and that defaulters often face jail.

Adam Green, editor of the report, said that expats should not assume that they are simply going to pocket the extra income from the zero income tax rate. He said those who plan to save money "need to do their sums before making the leap."

Tags: United Arab Emirates | Tax | Tax Breaks | Employment | Expats | Working Abroad | Work | Working Abroad | Lifestyle | Lifestyle | Working Abroad |


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