With no income tax and lots of valet parking, why leave Dubai?

In some ways the benefits of living in the UAE are summed up in four words: 'valet parking, no tax'.
No football this week. Instead I want to focus on the serious issue of tax.

Income tax, I mean, although I'll get around to the corporate stuff later. This is not usually a subject that bothers me much in the UAE, for the simple reason that there isn't any, at least not on income.

You may pay fees for some services and licences, and you will pay sales taxes on certain things, mainly for consumption. If you dine out at a big hotel in Dubai, you will certainly notice the addition of a 10 per cent charge by the municipality.

But this is what the economists call discretionary spending, and most people regard it as fair enough. You have the option of paying it or not when you make the decision to go for a night out.

A decision to impose a more general value added tax (Vat), as has been suggested in some GCC countries on a few occasions, would be a little more troubling.

But the principle remains the same even with Vat: if you don't want to pay it, don't spend the money in the hotel, restaurant, electronics shop or whatever.

With income tax, it remains the case that in the UAE, the top line of your salary slip is also the bottom line, and it's hard to see any circumstances where this might change in the foreseeable future.

It's part of the culture of the region. In some ways the benefits of living in the UAE are summed up in four words: "valet parking, no tax". Although that may make me sound mercenary, it isn't intended that way.

There is nothing mercenary about wanting to have more discretion over how you spend your own hard-earned income; it's one of the basic rights of personal freedom, surely?

On the valet parking, I can only claim selfish laziness, plus the habituation of many years' torture in London at having to find public parking at any big venue.

Even after seven years in Dubai, I still get a kick out of handing over the car to a helpful chap outside a big hotel and knowing that it will not cost me a fortune for the service.

On income tax, I am unapologetic: I hated it in the United Kingdom, and it would be a big shock to the system if I ever had to pay it again.

What got me thinking about tax was a little piece of economic research that arrived in the inbox the other day. It was an analysis of French public finances, which by all accounts are still pretty dodgy, along with most of the euro-zone countries.

But the thing that hit me like a hammer was the fact that, this year, under new tax legislation imposed by the socialist government, some 8,000 of the most well-off people in France will pay a tax rate of more than 100 per cent.

In other words, they will work all year as unpaid slaves of the French state, and at the end of it will still have to pay a bit for the privilege. Incroyable. Contrast this with the situation in Ireland. You still pay a considerable whack in personal tax, but if you have the good fortune to be a global computer company you can get away with very little, avoiding billions of dollars of tax, according to tax-avoidance campaigners.

The lesson is obvious: when and if I ever head back to Europe, it will be to the emerald isle, under the name Frank Apple.

 

fkane@thenational.ae

Published: May 22, 2013 04:00 AM

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