Taxation for Expats in Emerging Markets (2016 Update)
It was Albert Einstein who once said “The hardest thing to understand in the world is the income tax.”
One thing is certain regarding taxes: no one want to pay more when they can get away with paying much less. Almost every single country in the world has some form of taxation, but there are quite a few that offer greater benefits and stand out among the pack.
Consider the list below of prominent expatriate locales and uncover some of the taxation policies that may entice you- or deter you- from considering these locations as potential homes abroad.
The whole of the United Arab Emirates does not have any federal income tax on wages or salaries. Instead, each individual emirate- Dubai included- can impose their own individual income taxes. Thankfully for expats, none of the emirates act on this ability.
Property taxes differ based on the nature of the property. Municipal taxes in Dubai are collected based on annual rent paid. This figure is 5% on residential properties. Dubai also collects an annual waste collection tax, which pays for community maintenance. This normally costs 10-20 dirhams (roughly US$3-5) for every square foot of property.
There is no personal income tax in the Kingdom of Saudi Arabia. Expatriates, however, should anticipate a flat income tax rate of 20% to be applied to the tax-adjusted profits of resident non-Saudi and non-GCC individuals. Further, while there is no property tax, a zakat, an Islamic direct tax, may be required on property if it is being held for investment purposes.
Qatar has no system of personal income tax. It also does not have a value-added or sales taxes as well as no capital or wealth tax. Non-resident individuals, other than Qatari and GCC nationals, are taxed only on their business income within the nation. There are also no property taxes in Qatar. The only payable taxes found in Doha are corporation taxes, import levies, and a service tax. The service fee is typically 5% on restaurant and hotel bills.
There is no income tax system or capital gains taxes on this island country in the Persian Gulf. There is, however, a “social insurance tax.” This is implemented in order to fund unemployment programs and other social projects; this tax amounts to 1% of total salary earned.
A municipal tax is required to be paid by individuals in rented property. Expats should anticipate paying a 10% fee, which is based on the value of the property.
There is no personal or income tax levied against your salary in Oman. There are also no property taxes. There are not even tax forms to be completed, and no returns to file with the Omani Ministry of Finance.
The only possible deduction from your Omani-based salary that could arise for expatriates would be a contribution to a social security fund for welfare benefits and old age pension. However, this is frequently waived as an individual obligation by employers.
Taxation in Hong Kong is based on the territorial source principle. This means that people are taxed based on where the income was earned. Income derived from outside Hong Kong is not taxed at all by the Hong Kong authorities. This can be a great option for prospective expats who can telecommute worldwide to work, such as freelance writers, web application developers, and business consultants. For personal income earned within Hong Kong, the tax is capped at a rate of 17%.
Another great component of Hong Kong’s tax system is the ease in which it is administered. Individuals can file their taxes in less than ten minutes, with minimal assistance. It is regarded as one of the most efficient tax systems in the world.
Personal income tax rates in Singapore are regarded as one of the lowest in the world. Individuals, as in Hong Kong, are taxed only on the income earned within Singapore’s borders. The income earned by expats while working overseas is not subject to taxation barring a few exceptions, based on industry. Individual residents in Singapore are taxed on a progressive tax rate as seen here.
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