Dubai topped a list of cities around the world where high-income residents earn the most take-home pay after tax and social security obligations, according to a new report.
The emirate allows high earners to take home their entire salary, the PwC UK report, shared by the Dubai Media Office on Monday, said. The report measured cities based on the take-home pay of employees.
The PwC survey interviewed married people with no children who pay social security in the country where they are a tax resident. It also considered annual income brackets of £250,000 ($347,495/Dh1.3 million), £500,000, £1m and £2m to calculate the take-home pay of employees.
Hong Kong, Singapore, Florida and California round out the top five global territories or states where high earners take home the maximum pay after deductions for tax and social security obligations, the report found.
Other international destinations where high earners enjoy sizeable take-home pay include New York and big European cities such as Germany, Spain, the UK, Ireland, the Netherlands, Portugal, France and Italy.
More than half of UAE residents said they moved to the country to boost their income and a fifth of them said their salaries doubled when they relocated to the Emirates, a 2018 HSBC study found.
The study surveyed 22,318 overseas workers around the globe, including around 900 in the UAE.
However, the income of expatriate workers in the UAE is not 100 per cent tax free. Aside from paying value-added tax of 5 per cent 2018, citizens of some countries are also required to pay tax on their worldwide income.
US citizens in the UAE who earn above $108,700 annually have to submit a tax return to the Internal Revenue Service. However, South Africans who work abroad are only exempt from being taxed on their foreign employment remuneration if it is less than R1.25 million ($86,702) annually, according to the South African Revenue Service.
UK expats in the UAE do not have to pay tax on their foreign income if they are registered as non-residents, according to Her Majesty's Revenue and Customs. Expats can become non-residents in the UK by living for 183 days or more in another country.
Once you are considered a non-resident for tax purposes in the UK, you can still visit the UK for a certain number of days without losing your non-resident tax status.
“It is a myth that Dubai is tax-free. People have to consider things like Salik, Dewa, tourism tax and value-added tax,” David Mackenzie, managing director of recruitment firm Mackenzie Jones, told The National.
“When people move here, I don’t sell them the tax-free dream. We tell them instead that they will take home their entire salary. However, Dubai is one of the more expensive cities to live in; it is more expensive than London, for instance.”
Expats come to the UAE for its quality of life, attractive lifestyle, short commute to work and good take-home pay, Mr Mackenzie added.
The UAE has unveiled various residency programmes to attract and retain exceptional talent and foreign investors, allowing people to establish deeper roots in the country.
Dubai introduced a new initiative last year to encourage people who work remotely to move to the emirate. The programme enables skilled professionals to live in the emirate for a year and continue to work for their overseas employer, while being able to secure the documents required to rent a home, send their children to school and sign up for phone, internet and utility services.
Remote workers require a salary of $5,000 a month and proof of their existing employment.
The UAE government also announced this year that residents can obtain Emirati citizenship. The government or royal court officials can nominate skilled professionals for citizenship.
People eligible for nomination include investors, people in specialist professions such as doctors or scientists, artists and other “talented” or “creative” people.
The UAE also unveiled the golden visa programme – a long-term residency initiative – in 2019 to recognise experts in various fields who play a pivotal role in supporting the nation’s progress. It is also aimed at attracting skilled workers to the UAE.