Taxation for Expats in Emerging Markets (2015 Update)
It was one of the American founding fathers, Benjamin Franklin, which said “In this world nothing can be said to be certain, except death and taxes.”
But there is no reason to pay astronomical taxes when you 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 impose little or no personal income tax, and other tax benefits can surely be found.
One of those exceptions, the Middle East, has the lowest tax rates out of any other region in the world, making it a desirable location for expat workers to move to.
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. Rather, each individual emirate, Dubai included, can impose income taxes. Dubai, like the other emirates, does not do this however.
Property taxes differ based on the nature of the property. Municipal taxes are collected based on annual rent paid. This figure is five percent on residential properties, and ten percent for commercial premises.
There is no personal income tax in the capital 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. And while there is no property tax, but a zakat (an Islamic direct tax) may be payable on property if it is being held for speculative purposes.
Qatar has no system of personal income tax, no value-added or sales taxes and no capital or wealth tax. Non-resident individuals, other than Qatari and GCC nationals, are taxed only on their business income in the Qatari capital. There are no property taxes in Qatar. The only payable taxes found in Doha are a corporation tax, import duties, and a service tax (5% on restaurant and hotel bills).
There is no personal or income tax levied against your salary each month in the capital of Oman. There are also no property taxes in Oman. There are not even tax forms to be completed, and no returns to file with the Omani Ministry of Finance. The only potential deduction from your Omani salary that could arise would be a 6.5% contribution to a social security fund for welfare benefits and old age pension. However, it is frequently seen that your employer will waive this individual obligation.
Taxation in Hong Kong is based on the territorial source principle. This means that individuals are taxed based on where the income was earned. Income derived from outside Hong Kong is not taxed in Hong Kong- this can be a great option for individuals who can telecommute worldwide to work. Married couples are assessed and taxed separately unless they elect for joint taxation in Hong Kong.
Personal income 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. An individual 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 one of the lowest in the world. Individuals, as in Hong Kong, are taxed only on the income earned within the country. 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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