A few years living and working in the UAE can do wonders for your bank account - assuming, of course, that you have retained your job during the current world economic crisis and, simultaneously, managed to avoid losing your shirt in the local property market. While you probably spend more on "quasi-taxes" such as speeding fines and car park tickets than you ever thought possible, at least you do not have to pay UAE income tax on your earnings.
And, if you are sensible enough to have arrived here from anywhere except the US, you are probably enjoying generous concessions from your domestic tax-collecting institutions. The tax breaks offered by most countries to their expatriate nationals depend principally on an individual's non-resident status, and though this article focuses on the issue of non-residency as it applies to UK expatriates, I strongly advise you to consult a tax specialist who is familiar with your unique set of circumstances.
If you are UK non-resident, for example, you pay no UK tax on the income that you earn from overseas employment nor from your foreign investments, though you are liable for tax on the income that arises from UK sources, such as rental income. This is a generous tax break and explains why there are so many Brits in this part of the world - amazingly, neither the UK nor the UAE governments seek to tax your local earnings.
But to qualify for this tax break, you must convince Her Majesty's Revenue and Customs (HMRC) that you are, indeed, a UK non-resident. And, sinisterly, there is recent evidence to suggest that this will be more difficult to achieve than it has been in the past. In the UK, there is no formal legal definition of "residence". HMRC's practice, based mainly on court decisions, is to regard you as resident in the UK during a tax year if you spend 183 days or more in the UK during that year or if you have spent more than 90 days per year in the UK averaged over the previous four years.
However, it is important to remember that these rules have no statutory force and are for guidance purposes only. To establish UK non-residence, you need to show that you have left the UK permanently (for at least three years), or for a settled purpose, such as education or employment. Additionally, any UK visits must average less than 90 days per year, as noted above. A recent court case - Grace vs The Commissioners for HMRC - demonstrated how easy it is to fall afoul of these non-residency requirements.
Mr Grace is a long-haul pilot for British Airways who claimed, after a period of living in the UK, that he had relocated to his native South Africa and was now commuting to the UK for his work while resident in South Africa. Although he had bought a house in South Africa, had significant ties there and had satisfied the 90-day rule, he was judged still to be UK resident and therefore liable for income tax on his salary.
The factors that influenced the court's decision were: * he retained a house in the UK; * he was on the electoral roll in the UK as a resident; * mail was sent to him at his UK address; * he kept a car in the UK; * he had a UK bank account into which his salary from British Airways was paid; * he was registered with a dentist in the UK; * his ex-wife and daughters lived in the UK - but he had had no contact with his children for more than 30 years; and
* he was a member of the professional body of the British Airline Pilots Association. This court decision confirms that a UK tax resident is unlikely to be classified as a UK non-resident unless there has been a break in his or her pattern of life. Another case - Robert Gaines-Cooper vs HMRC - looked at the method of calculating the 90-day average. Previously, HMRC accepted that both the days of arrival and departure could be ignored. A common practice, especially among UK eurocrats in Brussels, was to arrive in London on a Friday and depart on a Sunday. This would then be counted as one day spent in the UK.
The commissioners disagreed, arguing that the number of nights spent in the UK was more important. In the above example this would mean two days spent in the UK, not one. Mr Gaines-Cooper had used the arrival/departure rule to claim that he had spent fewer than 90 days in the UK, but he was outmanoeuvred by the commissioners. Interestingly, Mr Gaines-Cooper had been a tax inspector himself, so there was not a lot of sympathy for his cause.
New legislation that went into effect on April 6, 2008 stipulates that any day you are present in the UK at midnight will be treated as a day spent in the UK for the purposes of the 90- and 183-day rules. The key point is that you have to establish residence overseas. Only then does the 90-day rule come into the picture. If, however, you've never really left the UK you will remain UK resident, whether or not you pass the 90-day test.
This article refers to UK non-residency as it applies to UK income tax liability, and does not deal with capital gains tax or inheritance tax, which are governed by an entirely different set of rules. It is also important to realise that I am a financial planner, not a tax expert. If you are concerned about your status, you should seek advice from a tax professional. Finally. as stated above, most countries give similar tax breaks to their citizens when they move overseas to work.
The major exception is the US, which does not accept the notion of non-residency. Its citizens remain liable for income tax no matter where they live, though they do get a tax-free allowance, which currently stands at US$87,600 (about Dh322,000) and rises in line with cost of living increases.
Bill Davey is a financial adviser at Mondial-Financial Partners Dubai. Write to him at bill. davey @mondialdubai.com
COMPANY%20PROFILE
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Monster
Directed by: Anthony Mandler
Starring: Kelvin Harrison Jr., John David Washington
3/5
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Concrete and Gold
Foo Fighters
RCA records
SPECS
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The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
Secret Pigeon Service: Operation Colomba, Resistance and the Struggle to Liberate Europe
Gordon Corera, Harper Collins
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
The Energy Research Centre
Founded 50 years ago as a nuclear research institute, scientists at the centre believed nuclear would be the “solution for everything”.
Although they still do, they discovered in 1955 that the Netherlands had a lot of natural gas. “We still had the idea that, by 2000, it would all be nuclear,” said Harm Jeeninga, director of business and programme development at the centre.
"In the 1990s, we found out about global warming so we focused on energy savings and tackling the greenhouse gas effect.”
The energy centre’s research focuses on biomass, energy efficiency, the environment, wind and solar, as well as energy engineering and socio-economic research.
EXPATS
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