Yes...in my company it is used to create neutrality in our employees on international assignment. I.e staff sent to a country where there is tax are no worse off hypothetically than those who come to UAE where there is no tax. The hypothetical calculation is done once per year by the company's tax adviser, where any amount overpaid is refunded to the employee and amounts underpaid are collected. This isn't the same as physical tax paid. I think it's quite a standard procedure for international staff.
Yes, I have it too. As said above, its pretty standard for international companies who might have multiple expats in different locations. Basically it means they pay you the same amount of net income you would have receivd in your home country after paying tax.
However, where companies usually apply tax equalisation, they will usuall also pay an Expat allowance and/or hardship allowance. In my case, our company pays a 15% tax free bonus for all Expat assignments irrespective of country (we also have Expats in the US, China & Brazil).
There is then a further 15% as a hardship allowance for Dubai (as determined by an independent consultancy group called ECA - Employment Conditions Abroad). If you were being posted to Africa or India, this 'hardship alowance might be 25% or 30%, while a posting to a European country might only be 5%.
A cost of living allowance is also another common adjustment. Dubai is said to be 30% cheaper than Australia, so there also wanting to reduce my package on this basis. Its being debated vigerously at present !