How Attractive Will UAE Be In the Near Future

[emohit]

With the proposed introduction of VAT, could there be additional imposition of actual Sales and Income tax?

Will this trigger an exodus of expats out of UAE? How is this likely to go?

[Elphaba]

The cost of living in the UAE as already not as cheap as many assume, in fact it is quite expensive overall, but the introduction of VAT won't immediately mean that ex-pats leave. You forget that not everyone moves here just for the money.

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[BLM]

LOL! Major misconception about moving to Dubai - it's tax free and really cheap, you'll save loads of money!

Food and cars are cheaper but it stops there. Rent is HORRENDOUSLY expensive, utilities and services like broadband and cable TV are more expensive (than the UK). Alcohol is expensive. Dropping into the comfy expat lifestyle is expensive I honestly don't think we'll save any money by living here, and in fact a lot of industries only offer you the same as what your take home was in the UK.

But on the flipside, Dubai is a wonderful place to live. I wouldn't swap it back for London anyday!

[McBook]

This is a very interesting question!

Like elphaba says, not everyone moves for money but there's no doubt that it's a BIG factor. I reckon the small amount of VAT that is proposed wont hurt the educated, higher earning expats too much but the imposition of an income tax would have a massive effect. BLM hits the nail on the head with her comments about the cost of living in Dubai.

The positon of the unskilled labour in Dubai is probably a more important one though. These guys have seen the value of their take-home pay plummet because of the dollar peg and they can't offset that loss by saying "ah well, at least the lifestyle is good". If the slave labour dries up who's gonna do the jobs that the the westerners/ emiratis won't?

Don't know if anyone read it but there was an excellent article in The Economist about the Gulf economies (and Dubai in particular) a couple of weeks ago. You should check it out on their website if you're interested.

[BLM]

There's also a debate raging in Gulf News and articles in the National about this - they pose a very good point!

From a totally selfish perspective, I just hope it doesn't all go tits-up in the next two years. I really love living in the sunshine

[Iron Horse]

Like every other tax everywhere, it raises the prices of everything. So now the high rents and cable/internet services will cost more as well as the other things too which didn't before.

The VAT is a necessary tax, even though it's going to hurt the laborers more so than managerial people here. Manager's will still whine and complain and some will leave. I've read only two percent to five percent, which isn't much, but it means if you want that nice watch you need to purchase it before the end of the year.

I don't think we'll see an income tax just yet, but it will come because it has to for the future of Dubai.