Globe-Trotting Sportsman Or Entertainer: Dubai

A UAE citizen or resident with extensive, international, multi-sourced income is not subject to personal taxation in Dubai, although the peripatetic professional may well find herself paying withholding tax in a number of countries which cannot in some cases be reclaimed because of the absence of a tax treaty.

Dubai does in fact have double tax treaties with 47 countries, and income earned in those countries may escape withholding tax under a treaty.

Sportsmen and entertainers receiving income in Dubai will not be subject to withholding tax.

American citizens, and nationals of the very few other countries that tax world-wide income on the basis of citizenship, won't be able to take advantage of the low-tax environment in Dubai, but for all other nationals, it is available.

In choosing between various types of offshore asset for investment purposes, the main consideration for a Dubai-based individual will be his or her intended residential plans following departure from Dubai. If the plan is to move on on to another offshore jurisdiction, then investment choices will not be much constrained, but if the plan is to return to a high-tax jurisdiction, then it is vital to study the anti-avoidance legislation of that jurisdiction before acquiring offshore assets. Some jurisdictions tax offshore assets more severely than domestic assets and 'look through' trust arrangements, while others accept trust assets as being outwith the tax net.

Equally, if it is planned to return to a high-tax jurisdiction, almost all of which tax world-wide income, then plans must be made to shelter income insofar as this is possible, by using trusts or other tax-distancing vehicles, if this is practicable within the tax regime of the chosen jurisdiction. The UK offers a special regime which may be helpful (select 'Globe-trotting Sportsman or Entertainer' and 'UK').

If the eventual residential jurisdiction is one of those that has a very restrictive tax regime, then individuals falling under this heading may need to resort to corporate structures to market their skills and manage derivative income flows. It may well be that these can usefully be based in offshore jurisdictions, although complex structures may be necessary if corporate anti-avoidance rules are to be avoided.

www.lowtax.net contains details of the corporate and individual tax regimes for 50 offshore jurisdictions.

NB: The suggestions given above do not constitute investment advice. They are intended only to assist individuals in finding appropriate professional advice, which is essential for anyone planning offshore investment.