As tensions in the Middle East rise after U.S. and Israeli airstrikes on Iran, foreigners are looking to leave the United Arab Emirates (UAE), while some wealthy Dubai residents who had been abroad are rushing home, even deploying private jets.
On the 5th, the Financial Times (FT) in the United Kingdom reported, citing travel industry officials and tax attorneys, that "Dubai residents stranded overseas by the Iran war are trying to return home to avoid a hefty tax burden from extended stays abroad."
Dubai has a tax environment favorable to the wealthy, with no personal income tax on salaries and rental income, and no inheritance or gift tax. However, to receive these tax benefits, one must reside in the UAE for at least 183 days within 12 months. Those who hold a local residency visa, have a permanent residence, or are employed or conducting business in the UAE must meet a minimum 90-day stay requirement.
Moreover, in the United Kingdom, where many of Dubai's wealthy spend time, staying beyond a certain period requires paying taxes there. If one fails to meet the residence criteria of both countries, a situation could arise where taxes must be paid to both Dubai and the U.K. simultaneously.
Under the U.K.'s Statutory Residence Test, foreigners should stay in the country for up to 120 days at most, and those with links such as dwellings or family in the U.K. must stay for an even shorter period to be recognized as nonresidents and avoid taxes.
The problem is that, with flights disrupted by the Middle East crisis, people who had been abroad for extended periods cannot get back to Dubai. As a result, some wealthy individuals are considering chartering private jets to return. That is because the jet expense is far cheaper than the taxes they would owe for failing to meet the minimum stay requirement.
Charles Robinson, founder of private jet company EnterJet, said he recently received requests for flights to Dubai, noting, "To maintain tax benefits, you have to meet the minimum number of days within the fiscal year, and it seems some clients are trying to return to the region to meet that requirement."
Ronald Graham, managing partner of the Dubai office of global law firm Taylor Wessing, also said, "There have been inquiries about how a failure to return to the UAE would affect one's tax situation with regard to calculating U.K. days." Dubai residents from other countries, including India and France, are reportedly facing similar difficulties.
Beyond tax issues, there are also cases of people rushing home for other reasons, such as having children in the UAE, FT reported. The outlet said, "In contrast to the wealthy seeking to return to Dubai, many people are desperately trying to get out," adding, "As corporations evacuate staff, the cost of private jets and rental cars has surged."