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It’s an offshore thing
“They now realise the lifestyle they’ve had is over and would like to move to a location that is more generous [for tax] than their home countries would be,” he continues. “There have been a lot of potential referrals from the Middle East and Dubai is on the top of that list.”
Widespread redundancies in the Gulf, particularly in Dubai, are the catalyst for this growing trend, according to industry figures. Since October last year, when the global credit crunch hit the Gulf’s economy, liquidity has dried up, billions of dollars of real estate projects have been cancelled, and thousands of expatriates who saw their bank balances swell during the boom years face returning home and into the arms of the taxman.
Egyptian investment bank EFG-Hermes predicted in March that the UAE’s population would contract by 5.5 percent in 2009, with Dubai’s shrinking 17 percent, driven largely by expatriate layoffs.
And those expats’ welcome home is likely to be a harsh one, at least financially. The UK government, for example, last month announced a new 50 percent tax band on those earning more than £150,000 ($237,000) a year.
As well as acting as a major disincentive to Britons considering returning home, critics say the new demands will prompt an exodus of top earners from the London business community. Indeed, UK tax specialists have already noted a lift in enquiries from high earners contemplating moving money offshore.
“The impact of tax and the tax regime has moved up people’s agenda in the last year or so; it has become far more prominent,” explains John Whiting, a London tax partner at accountants PricewaterhouseCoopers (PwC). “Individuals and companies [in the UK] are reconsidering their positions.”
The gradual tightening of tax regimes has led to the emergence of a new class of top flight business executive prepared to scour the globe in search of a more tax efficient lifestyle.
“We have seen over the last decade a growth of internationally mobile entrepreneurs and executives who will, rather than see themselves as Britons, French, or Americans, genuinely see themselves as moving around, spending two years here and three years there,” Whiting says. “Such people are naturally sensitive to tax issues.”
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