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Dubai residents stuck abroad because of the Iran war are trying to return home to avoid incurring large tax bills by spending too long outside the emirate, according to travel executives and tax lawyers.
Some are turning to private jet hire in order to prevent them being disqualified from the UAE’s generous tax status, which has no income tax on individuals, investors or most companies.
Charles Robinson, who founded private jet marketplace EnterJet, said he had received requests to fly into the region: “With minimum required days within an individual’s fiscal year to gain benefit from the tax regime, some appear to be requiring a return to the region to complete their days.”
A private jet was “an instrument of return” to keep them within their fiscal terms, “in many cases with the cost of a jet being far lower than their potential tax bill if they miss the minimum days”.
Ronald Graham, managing partner of Taylor Wessing’s Dubai office, said the law firm had received “discreet enquiries . . . around day count in the UK and — if they can’t get back to UAE — how will that impact their tax situation”.
He said most were waiting and seeing before taking action, but that the rich “really value the ability to move and work wherever they want, when they want, and when something like the Iran war disrupts it, they don’t like it”.
Concerns other than tax, such as children having remained in the UAE, have been motivating others urgently trying to return.
Hannah Wailoo, co-head of the Middle East group at law firm Withers, said: “There’s a whole raft of people who will be [in the UK] and can’t get home. They’ve got an immigration status issue, they might have a tax issue.”
Staying abroad too long could present two tax problems, Wailoo said: the people concerned might not spend enough days in Dubai to qualify for residency there; and they might spend too many days in the UK and be counted as UK tax residents.
Generally, individuals need to spend 183 days within a consecutive 12-month period to qualify as tax resident in the UAE. Another option is a 90-day minimum if they hold a residence visa, have a permanent home, are employed or carry out business in the UAE.
The UK calculates an individual’s tax residency based on a statutory residence test. Under the test the number of days someone can spend in the UK varies depending on how many ties they have to the country.
Some individuals living abroad could spend up to about 120 days in the UK and still remain non-resident, whereas others with stronger UK connections may need to keep their presence much lower at 90 or 46 days or even fewer.
Eamon Shahir, co-founder of online tax filing service Taxd who advises those moving from the UK to Gulf states, said that the key issue for most individuals splitting their time between the UK and UAE was remaining non-resident under the UK’s statutory residence test, which they could do by spending time in any country outside the UK.
Dubai also has large numbers of wealthy people from countries other than the UK, including India and France, with those individuals facing similar difficulties in trying to retain their UAE tax residency if they are currently outside Dubai. Spending more than 183 days in a country typically results in becoming tax resident in that country.
In contrast to those trying to return to Dubai, many others are desperate to leave. The cost of private jets and hire vehicles has risen sharply as some companies try to evacuate employees, according to insurance groups providing crisis-response protection.
Additional reporting by Lee Harris
