Financial Tips for the Working Expats in UAE

  • May 16, 2021
  • 10 minutes read

The opportunity to settle in a technologically advanced country with a lucrative pay package and a higher standard of living is a delight for any expat. Cities in the UAE like Abu Dhabi, Al Ain, and Sharjah provide great working opportunities in various fields of work. They are home to immigrants from all around the world. 

Dubai, however, comes at the top of that list. According to a survey conducted by HSBC, around 73% of the expatriates earn better in UAE as compared to their country of origin. 

One might get lured into earning more money by shifting to the UAE, but no decision should be taken hastily. You should plan on saving more so that you can have an easy living even at the age of retirement. 

It is important to consider the period for which you are settling in the UAE and whether you are bringing family along or not. Financial awareness is the key to making the most out of your working experience.

Today we will be providing financial tips for the working expats in the UAE. In the article, you will go through why you require a financial plan, how to save your money, information regarding expat pensions, and the importance of taxation.

Why is it Necessary to Have a Financial Plan?

For an effective plan, you need to dive into details about how to achieve desirable goals. Take it as a journey. The decision is not only based on the destination itself but also on how to get there. 

A good way to establish a financial plan is to consult with a financial advisor. They will provide you with a list of opportunities that can work for you while moving to the UAE. 

Financial Tips for the Working Expats in UAE

After having a clear mindset with a plan, read on to know what else needs to be kept in mind for the immigrants.

  1. Insurance

Keep in mind that you need to arrange for insurance yourself because any policy from your home country will not apply when you move abroad. Many companies offer policies that are specific to expats. You need to be aware of these before making a final decision of moving base.

  1. Pensions

In the UAE, pensions are not provided in the package for expats. This might be a cause of concern for your future well-being. As a result, you should consider gathering all the extra money that you earn for pensions. 

UAE might not provide pensions, but they don’t refrain you from investing in your pension fund back home. You won’t be provided with the tax relief which comes with it. If your home country is a part of the “Qualifying Recognized Overseas Pension Scheme,” then you can transfer your pension to a scheme. This will be affected by your decision regarding staying in the UAE or moving back and for how long.

  1. Property

With the money that you’ve saved up, many expats would want to invest in their home country by purchasing a property. It is considered the go-to investment when a large number of finances are required. It might not be easy to get a mortgage in your home country if you are living abroad. So you must have some sort of financial affiliation with your country and have a credit history.

  1. Tax Considerations

Living in the UAE means that your income is tax-free. The tax residency, however, will decide on the effect this will have on the global tax deductions. All countries have their way of levying taxes and follow specific tax regulations. 

For example, an expat from India living in the UAE might not pay tax in the UAE, but it doesn’t exempt him from paying tax in India. Many countries have set up a limit on your earnings before the tax amount is deducted. So your research of UAE will need to consider this important aspect.

Some countries might have tax rules where you can’t move freely from one place to another. It is a wise thing to have a talk with your employer about tax implications so that you don’t get confused when shifting to a new country.

  1. Use of Digital Wallet

Shifting abroad can become overwhelming, especially when it comes to managing your money. With the advent of technology, paper money has given way to cashless transactions. One way to do this is by using a digital wallet, and a good example of this is payIt eWallet. 

This eWallet application allows you to access, store and use your money, all from one place. It would reduce your stress regarding theft and is a much easier and convenient option for expats in the UAE. You simply need to download the app on your phone and let it work for you.

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The app offers high security since it is password protected and has a verification system. It is quick to delink your account from the device in case your phone gets stolen. 

You can also enjoy various discounts in a variety of stores. They provide you with a promo code with which you can shop from popular brands to your heart’s content. You can even use the app to withdraw money by choosing the “Cash out” option. It can pay your bills or pay any amount that you owe your friends. You can also request payment when in need.

  1. Offshore Bank Accounts

You need to cater to unforeseen circumstances like your bank accounts getting frozen. This is why some money should always be kept in your offshore accounts. This can come in handy at any time. If your foreign earnings are deposited in an offshore account, you might be able to get gross interest. 

You can avail of tax-free interest if you have money in your home account. You may have to provide a word regarding the fact that you do not live in your home country to avoid tax.

  1. Savings

We all know how important it is to save for the future or any emergency that might occur. Living abroad comes with its fair share of teething problems, but one should not comprise on how much money they make. 

A stay of around 3 to 5 years should ensure that you’ve saved enough to last you a while, even if you go back home and stay unemployed. The change can be managed. The tax that is exempted on your pay should become paid nonetheless but now as your savings. So that you do not touch this money for the duration that you are employed.

You can make use of many offshore plans which offer a better interest rate that can be both fixed and variable. This, in turn, could help you accumulate your savings.

  1. Wills

The inheritance tax for which your estate will be legally answerable at the time of your death would follow different tax regulations in different areas. The accomplishment of your will depends upon the residency status in your country. Your will should be recognized by the law and the official power. 

One way to do this is to have a separate will for every area in which you have assets. If your will is not recognized, then it would be dealt with according to Sharia Law. If you are receiving an inheritance of assets, then you need to figure out the type of assets that you are receiving, their availability, and the number of tax charges that apply.

The Bottom Line

The decision to move to the UAE does seem like an option you should accept without giving it a second thought. But a lot goes into the planning of settling in. It is imperative to hire a financial advisor who can guide you on your current financial situation and how you can make it better. 

They will provide thorough information regarding the tax, savings, and investment schemes about the country in which you want to make a home. All these things become a piece of cake if you hire the right financial advisor.

You should carry out research and also consider word-of-mouth related to renowned advisors. Look for their reviews from common friends. You must take your time before choosing an advisor. Some of the companies have made this easy by offering advice in a variety of countries.

You must also try to strike the right balance between the risk of being an expat and the opportunity it provides you. If you do make the plunge but can barely manage to save. It wasn’t a good decision after all. 

Nonetheless, living in the UAE is an experience to not only make good money but also create a better lifestyle for yourself and your family. It is important to consider essential requirements like your child’s education or an employment opportunity for your spouse. 

This would enrich your experience as an expat. You can go back home whenever you want, but the opportunity doesn’t come easy. So make the most out of it by following the tips that we have discussed with you.

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