Expat Resource
One of the great attractions of working in the UAE is that there is no personal taxation, or as it is commonly put - the UAE offers “tax free living”. To take advantage of the “tax free living" there are a number of important considerations when it comes to finances. Here we will cover some but by no means all of the areas which require attention. For a full review of the areas that might affect you, please call us to arrange a meeting.
Currency
The UAE currency is UAE Dihram (AED) which is divided into 100 fils, at the time of writing (November 2009) the exchange rate to the GBP is 6 AED to 1 GBP.
Banking
All the major overseas banks operate in the UAE as well as numerous smaller local banks. Whilst the big banks operate in UAE, their systems are completely independent to those in the UK, America or other developed countries, so whilst many think the easiest thing is to establish an account with the bank that they bank with in their home country, there often tends to be little merit in this as the accounts are run totally autonomously. It is important to consider the merits of the services offered by each of the banks and in particular the costs of transferring money to the home country and also internet banking facilities.
All the banking institutions offer various options and it is important to decide what will be the most suitable for each individual’s requirements, for example, should the account be opened in the UAE or should the account be an offshore account based in Guernsey or Jersey? What currency should the account be in?
Whichever route is chosen, most banks issue an ATM card and cash still remains the main form of paying for things, although there is starting to be the emergence of a “debit” card. There is not yet a “direct debit” system in the UAE therefore regular payments need to be established through a credit card or through the use of post dated cheques. It should be remembered that it remains illegal to “bounce” a cheque.
Cost of living in the UAE
Accommodation
Expats have the option of buying or renting in the UAE, in the majority of cases individuals decide to rent, certainly to begin with as they get used to living in a new country.
Over recent years the rents payable and indeed property prices have risen at astronomical levels, this is predominately due to a shortage in housing supply. However, due to the global financial crisis through 2008 - 2009 there has been a significant fall (reportedly in the region of 40%) in property and rental prices, however, rent is still a significant outgoing when living in the UAE.
The cost of accommodation must be borne in mind when working out your finances. In addition, to the rental cost there is also the other ancillary bills to pay such as electricity, water etc.
Transportation
Cars remain substantially cheaper than in Europe and are arguably a necessity to get around Dubai or Abu Dhabi. Cars can be purchased through finance arrangements or another option is to lease a car. The cost of petrol is very low, often costing the equivalent of 20 GBP for a full tank.
Taxis are in abundance and remain a relatively cheap form of transportation. In Dubai, the Metro has recently opened and although a long way from being totally complete this is a significant development in transportation in the City and also a cheap and easy way to travel around the City. Whichever form of transportation is chosen it is important to consider the costs.
Education
There is an excellent range of primary and secondary private schools in the region which cater particularly for the expat community. The cost of education in the UAE continues to rise significantly ahead of annual inflation and at the present time the cost of education is between 30,000 AED and 60,000 AED per annum, depending on the school.
Therefore, individuals with children that are to be educated whilst living in the UAE, must consider the cost of fees in any budgeting.
For a full review of your financial situations and what factors may affect you, please call us to arrange an initial meeting.
