SecurID
17th Jan 2005, 19:31
Dubai: A British politician warns that his country's expatriates could be hit with heavy tax demands by their government back home.
Conservative opposition lawmaker Howard Flight said he feared the UK's Labour government was planning to introduce a US-style citizenship tax regime.
This would cost many of the estimated 100,000 British citizens in the UAE tens of thousands of dirhams a year.
US citizens living abroad have to file annual US income tax returns, so Americans living in the UAE do not benefit from the country's tax-free regime.
British citizens in the UAE do not have to pay taxes to their home government, as long as they remain out of the United Kingdom long enough to be classed as non-resident.
During a visit to Dubai, shadow finance minister Flight said this system was at risk of being scrapped, so that British expatriates would have to pay up to 40 per cent of their UAE income to their home country.
"One thing the government is looking at is the residence and domicile rules. The fear is that they will make changes to taxation to a worldwide citizenship system," Flight said during an interview with Gulf News.
"I do think there is a chance this could happen. The Labour government is scratching around to increase revenue and they would see this as a fairly painless way of doing just that.
"It would really hit people [living in a place such as] Dubai. Most British citizens here would find themselves paying the higher 40 per cent tax rate on some of their income.
"If the government does anything, I would expect them to do it shortly after being elected, because it would be a nasty thing to do close to an election."
Tony Blair, the Prime Minister, is widely expected to call a general election for May, and is expected to win a third term in office.
Flight, a deputy chairman of the Conservative Party, said it was important for British expatriates to exercise their right to vote in the forthcoming poll.
British citizens who have been on the electoral register in a UK constituency in the past 15 years are able to vote in their country's general elections.
"Expatriates should want to vote to protect their own interests. Particularly in somewhere like Dubai, expats are working hard to save some money and return to the UK," said Flight, who has been regularly visiting Dubai on business for about 30 years.
Conservative opposition lawmaker Howard Flight said he feared the UK's Labour government was planning to introduce a US-style citizenship tax regime.
This would cost many of the estimated 100,000 British citizens in the UAE tens of thousands of dirhams a year.
US citizens living abroad have to file annual US income tax returns, so Americans living in the UAE do not benefit from the country's tax-free regime.
British citizens in the UAE do not have to pay taxes to their home government, as long as they remain out of the United Kingdom long enough to be classed as non-resident.
During a visit to Dubai, shadow finance minister Flight said this system was at risk of being scrapped, so that British expatriates would have to pay up to 40 per cent of their UAE income to their home country.
"One thing the government is looking at is the residence and domicile rules. The fear is that they will make changes to taxation to a worldwide citizenship system," Flight said during an interview with Gulf News.
"I do think there is a chance this could happen. The Labour government is scratching around to increase revenue and they would see this as a fairly painless way of doing just that.
"It would really hit people [living in a place such as] Dubai. Most British citizens here would find themselves paying the higher 40 per cent tax rate on some of their income.
"If the government does anything, I would expect them to do it shortly after being elected, because it would be a nasty thing to do close to an election."
Tony Blair, the Prime Minister, is widely expected to call a general election for May, and is expected to win a third term in office.
Flight, a deputy chairman of the Conservative Party, said it was important for British expatriates to exercise their right to vote in the forthcoming poll.
British citizens who have been on the electoral register in a UK constituency in the past 15 years are able to vote in their country's general elections.
"Expatriates should want to vote to protect their own interests. Particularly in somewhere like Dubai, expats are working hard to save some money and return to the UK," said Flight, who has been regularly visiting Dubai on business for about 30 years.