It has been reported in the Financial Times that the UAE is about to show leniency in tax rules to allow expats to spend longer periods abroad without losing their tax status.
Charlie Sosna is Head of Private Wealth and Tax at law firm Mishcon de Reya, and spends most of his time advising internationally mobile HNW and UHNW families. He has shared his response to this with us as follows:
“This move by the UAE to relax its rules and allow expats to spend longer periods abroad without losing their tax status may offer some comfort on paper, but it does not eliminate the underlying tax risk.
“Even if the UAE continues to treat an individual as tax resident despite extended absences, other jurisdictions may take a different view if that person is spending significant time there or has established sufficient ties.
“In practice, this creates real uncertainty. Individuals could find themselves treated as resident in more than one country, or challenged on where they are genuinely based. Those returning to the UK in light of the current situation should be aware that they may trigger a UK capital gains tax liability on gains made whilst in Dubai, as well as an income tax charge on certain forms of income received during that time, both of which they may have assumed would fall outside the UK tax net.
“The key point is that the UAE’s changes alone will not protect against scrutiny elsewhere, so anyone in this position should seek advice before assuming their status is secure.“
