British Expats - Expat Tax!!!!!!!

Sorry it's so long but thought you might be interested. JB

Goodbye Sunshine
>
>Speculation is mounting that the UK and possibly other countries in the
>Organisation of Economic Co-operation & Development (OECD) are about to
>introduce global taxation for expatriates. The impact could be profound for
>the Gulf.
>
>Following a visit to the UAE in July, the chairman of the British
>Conservative Party, Liam Fox, sent a letter to Gordon Brown, the Chancellor
>of the Exchequer, asking a singular question. Was the government preparing
>to introduce worldwide income taxation in its next budget? While in a
>statement the UK Treasury denied that any technical review was under way it
>did not rule out the introduction of global taxation in the future.
>
>For the 200,000 UK nationals resident in the GCC, there are few policy
>issues more likely to cause sleepless nights. Equally, for the economies of
>the gulf, the imposition of income tax on expatriate workers has serious and
>complex ramifications. The imposition of income tax on UK nationals could
>hoover $ 2,000 million a year out of the region.
>
>"Gordon Brown will not rule out changes to non-resident's tax arrangements
>and I fear no taxpayer is safe from the government's addiction to tax," UK
>shadow chancellor Oliver Letwin said in a statement on 23rd August 2004.
>"The rumours of further tax-grabs by the British government will not go
>away. There is no doubt that if Labour wins the next election they will have
>to raise taxes to fill the black hole in the public finances. What isn't
>clear is who will be subjected to these third term tax rises." With a
>general election likely to be held in the UK next year, the heated rhetoric
>is unsurprising, but the lack of a statement saying such a move would be
>reversed by any new Conservative government is significant.
>
>Senior businessmen in the region are taking the threat seriously. "It is by
>no means certain that legislative changes will be made, although options are
>definitely being considered," says David Hodgkinson, the chief executive and
>deputy chairman of HSBC Bank Middle East. "Such a step would have an adverse
>impact on one of Britain's key invisible exports-the provision of expertise
>to international markets. It may encourage a number of British residents in
>the UAE to consider a change of domicile, given the attractiveness of
>long-term residence there."
>
>If the chancellor does decide to tax worldwide income it will set a
>precedent which other finance ministers will find hard to resist. At
>present, almost all OECD countries grant tax exemptions for nationals
>working abroad for a minimum period. The stark exception is the US, which
>has taxed the worldwide earnings of its citizens since 1976. However, if
>Australia, Germany, France and Italy were to follow a move by the UK to
>impose expatriate income tax-as is likely-up to 400,000 workers in the
>region could be effected.
>
>Few tears will be shed at home if these governments do decide to tax high
>earners overseas in order to fund social programmes and essential services
>at home. Expatriates can reasonably expect to enjoy a 50% increase in living
>standards by moving to the gulf, where many receive sizeable housing and
>vehicle allowances. Any move to introduce universal EU worldwide income tax,
>especially for those working in the oil-rich gulf, is likely to prove
>popular with voters in Europe who are struggling to come to terms with high
>energy prices and rising costs of the welfare state.
>
>Disposable Income
>
>The EU's aim to align tax policy is moving slowly forward and a co-ordinated
>move by the member states is possibly within reach. The GCC and EU have been
>at loggerheads for almost two decades about a free trade area, with a major
>European objection being the discriminatory treatment of local firms in the
>region. The absence of personal income and corporate taxation throughout the
>GCC in designated free zones has also drawn critical attention. Developments
>such as the Dubai International Financial Centre, which will offer lucrative
>incentives for some of the highest earning professionals in the financial
>services industry, could suck wealth out of the City of London and
>Frankfurt.
>
>Any policy change could reverse the flow. The potential loss of disposable
>income would drive many expatriates away from the region and discourage
>others from seeking employment there. Based on average earnings of Â£30,000
>($53,700), a single person working in the gulf might have to pay Â£5,000
>($8,950) in worldwide income tax, if, for example, prevailing UK tax levels
>are applied. Those with an annual salary of Â£50,000 ($89,500) would see
>their annual salary fall by a hefty Â£12,207 ($21,851)
>
>The immediate effect this would have on gulf economies would be profound.
>Consumer spending in the UAE, which is home to the gulf's largest OECD
>workforce of which the biggest segment, about 150,000, are UK expatriates,
>would be hardest hit by the loss of disposable incomes. Based on the
>assumption that there are at least 100,000 economically active UK nationals
>in the federation earning on average Â£35,000 ($62,650) a year the imposition
>of worldwide income tax could drain Â£650 million ($1,164 million) from the
>local economy, which is roughly equivalent to 1% of the UAE's forecast GDP
>in 2004.
>
>Dubai, more than any other emirate, has aggressively advertised the benefits
>of working, residing and investing within its tax-free borders. Marketing
>campaigns for premium real estate developments such as Palm Island, The
>World and Emirates Hills play on the fact that people living in the UAE pay
>no income tax. The residential rental market would be as hard hit as the
>nascent buyer market. Any cooling of the domestic economy, prompted by a
>fall in consumer spending, could threaten the viability of many of the grand
>shopping projects under construction such as Mall of the Emirates and Dubai
>Mall.
>
>The entire region would be affected. MEED estimates that the direct impact
>on the region's financial flows would be massive; some $4,000 million a year
>could be sucked out of the GCC economies by foreign tax regimes. This is the
>equivalent of 1% of regional gross domestic product(GDP), but the knock-on
>impact on propensities to consume, marginal savings rates and the multiplier
>effect, the real impact could be considerably greater.
>
>Regional corporate strategy would also be hit. Key personnel-or at least
>those who regard them selves as key-would likely push to pass their new
>obligations back to their employers. Effective wage bills would rise and the
>attractions of non-OECD nationals would be enhanced. The benefits of
>multiple nationalities would take on a new dimension.
>
>Collection
>
>If OECD governments are to introduce worldwide income tax, collection will
>pose a stiff yet not insurmountable challenge. Many expatriates working in
>the gulf are already employed by major international companies and receive
>their salaries directly in their home countries-their salaries and packages
>could be accessed at will by the taxmen.
>
>However unsettling the impact of worldwide income taxation would be on the
>gulf, it could also create a window of opportunity. Local governments could
>find themselves able to impose income tax on expatriates without any
>negative economic impact. The structure of double taxation treaties would
>allow levies to be imposed on salaries or packages without any net
>difference to the individual. The tax burden would be the same but
>proportions of it would be redirected to host countries rather than the
>country of origin. The scramble for primary tax rights between governments
>could be frenetic. However, at present, GCC countries have a patchy treaty
>coverage. For example, only Kuwait and Oman have double taxation agreements
>in place with the UK; and Saudi Arabia's only such treaty is with France.
>Any movement to tax expatriates by home governments could trigger a flurry
>of activity on this front as regional authorities seek the flexibility of
>expanded options.
>
>Income taxation has already been examined closely in the Gulf. Riyadh drew
>up plans for the introduction of a 5% base income taxation rate for all
>expatriates, but the Majlis al-Shura rejected the move last year, arguing it
>would be suffocating to business as the costs would be passed back to the
>employers. Such a position could be rapidly altered if the policy amounted
>to little more than redirecting the flow from foreign to domestic
>governments.
>
>The idea already has supporters. The IMF has strongly recommended the
>imposition of a personal income tax system and value added tax among other
>measures including expanding the base of corporate income tax and
>introducing property tax as a means of broadening the revenue base of GCC
>economies that remain heavily dependent on oil exports.
>
>With the UK likely to play the role of catalyst in any regime change, the
>public utterances of Gordon Brown and the strength of the UK's fiscal
>position will be watched closely. That the treasury could expect an
>additional income in the order of Â£8,000 million ($12,000 million) a year
>from British expatriates around the world, and the political costs to the
>Labour government would appear to be manageable, could yet prove decisive.
>For the GCC, a policy shift in London could trigger an avalanche of OECD
>action that would have a dramatic impact on labour markets. For the
>expatriates and their employers, the threat of income tax-no matter how
>distant-has to be taken seriously.
>
>The table on the next page shows the effects across different income levels.
>

I have this table if anybody wants it. JB
>

Quote:

Originally Posted by Jellybean

JB... I want it. Can u e-mail the table to [email protected]?
Thanks