Sunday, February 21, 2010

Dubai real estate to benefit from higher tax rates in UK as chancellor seeks to narrow £178 billion deficit

UAE real estate to benefit from UK tax hike

Dubai real estate to benefit from higher tax rates in UK as chancellor seeks to narrow £178 billion deficit

Real estate professionals in Dubai are waiting for a potential exodus of UK residents desperate to escape UK Prime Minister Gordon Brown’s new 50% tax rate for individuals earning over £150,000 (AED 900,000) which will come in to force in April 2010 affecting tens of thousands of UK professionals.

“Under the new UK tax rules, somebody with a personal income in excess of £200,000 (AED 1.2 million) will have to pay £5,000 (AED 30,000) more per year in tax. That’s a very strong incentive to relocate to lower or tax-free environments such as the UAE,” said Mohammed Nimer, CEO of MAG Group Property Development.

The tax ceiling rate has been raised as the UK tries to manage its burgeoning deficit of £178 billion. According to a poll by international law firm Withers, 75% of respondents, made up of high net-worth individuals in the banking, insurance, recruitment and accountancy sectors, confirmed that it would be likely for them to move abroad within the coming year. In addition, seven out of ten said they would move their family and their business overseas.

“Although the survey only took in 116 delegates at the conference, it is representative of the professional white collar ‘City’ worker in London. These people are highly educated, highly paid and more importantly highly fluid. They have the sort of job or business that are technologically driven and therefore can easily be adapted to another country,” said Nimer.

The survey was carried out by Withers during a conference on the comparative tax and lifestyle advantages of staying in the UK or moving abroad. Of potential countries to relocate to, Switzerland was by far the most popular with 63% of respondents. The Channel Islands pulled 13% of the vote with Hong Kong, Monaco, Singapore and the United Arab Emirates also mentioned as potential

“Obviously all of these countries have low tax regimes with the exception of the UAE which obviously has a zero income tax rate. Residential and commercial real estate in places such as Dubai will benefit from this. With deficits almost out of control in Portugal, Ireland, Greece and Spain (PIGS) the Euro has come under increasing pressure of late and the UK exodus might just be the thin end of the wedge if tax rates rise significantly across the Eurozone,” said Nimer.

In summary, Nimer added, “Although huge tax savings can be a massive incentive to relocate to the UAE, it has much more appeal, not least of all its safety and security, top private education and beautiful winter climate.”

Photo caption: Mohammed Nimer, CEO of MAG Group Property Development

About the MAG Group

The Dubai-based Moafaq Al Gaddah Group of Companies (the MAG Group) was established in 1978 and has grown into a multinational organisation with 18 offices in eight countries throughout Europe, the Middle East and Asia.

In the last five years the MAG Group Properties has invested in 12 properties at various stages of development across the residential, commercial and industrial sectors. The company focuses on projects that provide long-term benefits to investors and customers.

In total MAG has a property portfolio in excess of AED3 billion and was one of the first developers to create Escrow accounts for all of its projects, long before the Dubai Government introduced Law number 8. In October last year, MAG Property Development was awarded ISO 9001 certification by risk management company Det Norske Veritas (DNV). MAG still remains one of the few developers in the region to be accredited to that standard.

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