Welcome to Dubai and a new and exciting life. There is a lot to learn and while this is not a complete guide to setting up in Dubai, it does give you a useful overview of many of the financial and legal issues that new residents need to be aware of. A version of this article was first published in July 2017, and has proven to be popular, but an update is useful.
Your ability to live in the UAE is linked to employment and it is impossible to rent a property (apart from on a short-term basis) without a residency visa and accompanying identity card. These will be provided by your employer or as part of the package when you set up a trade licence if you wish to have your own business. You also need these to buy a car, get a UAE driving licence, get an alcohol licence – a legal requirement for Dubai residents if you want to buy alcohol anywhere and or keep alcohol in your home.
The rules can vary between emirates, although the main legal issues are correct for all, but this guide is mainly for Dubai residents.
Banks in the UAE are regulated by the UAE Central Bank and mostly offer a modern banking service, with decent on-line banking. Everyone can tell you a story of poor service from one bank or another but in my experience, dealing with numerous issues over the year, there is not a huge difference between most of them.
People often ask which is the best bank to open an account with but there is no easy answer to that question. Often the bank used by your employer is a good option, particularly if you may want to take a loan to buy a car at some point, for example.
While it may appear that banks want to hand out credit cards or personal loans like sweets please don’t fall into the debt trap that so many do. Interest rates on credit cards are particularly high so although they can be useful, it is best to repay them in full each month. It is important to be aware that non-payment of debts, or bouncing a cheque (of above AED 200,000 in Dubai but in any amount in the other emirates), is a criminal offence with serious consequences. Very serious consequences.
Do make sure that you read all agreements properly before signing as too often the banks will not explain the restrictions and penalties that apply to any credit agreement.
UAE bank accounts are frozen on death. It is best that husbands and wives have separate accounts, preferably with different banks, so that in the event of one of them dying the other still has access to money. It is not necessary to have a regular salary to open a simple account and several banks have non-salary account options, some of which you can open just by using your phone and uploading a few documents.
Bank accounts are also usually temporarily frozen if the bank is advised that you are changing employment. If there are no loans or debts it will be unfrozen quickly but if you have liabilities it may remain frozen until you prove you have a new job and income to service the debts.
Due to the issue with accounts being frozen it is beneficial to have an offshore account and you don’t need large sums to open one. See here for information: The benefits of offshore banking for expats. This is also a good place to keep an emergency cash fund, the number one priority in sensible money management, especially as the UAE does not provide a safety net to expats.
Retail banks offer poor rates of exchange on currency transfers so you can get much better value for money by using a specialist company: How to save money on your currency transfers I don’t recommend local currency brokers, largely as there have been major issues with some recently, but work with a company that is properly regulated in the UK, with a Dubai office.
It is sensible to keep to keep a bank account open in your home country as it can be tricky to open one on your return without having been there for several months.
The law of the land
The UAE follows Sharia law and that applies to everyone who lived here, expats and locals, Muslims and non-Muslims alike. This is likely very different to the law in your home country.
Among other things, this means that wills you have written in your home country will not be valid or recognised in the UAE. If you build up assets, or have dependent children you would be wise to take steps to protect them. See these articles for facts and information:
Whilst the UAE is advertised to new residents as being tax-free, suggest that to any long-term resident and they will laugh! There is no personal income tax but we pay fees and taxes on a long list of items. VAT at 5% was introduced on most goods and services in 2018.
Be aware that no longer living in your home country doesn’t always mean you are exempt from income tax there. The rules vary between countries but the onus is on the individual to be aware of the relevant rules.
I advise many British Expats on these issues and Brits need to be out of the UK for at least one full tax year (6th April to 5th April) to be considered UK non-resident for tax purposes in respect of their non-UK earnings.
UAE Labour Law was introduced in 1980, and there have been various updates since then, and this applies to the majority of companies. Government organisation are exempt although most largely adhere to the rules.
Sadly, far too many companies try and flout the law but there are procedures in place to assist employees. I write about this issues for The National newspaper each week and a link to my column with numerous read Q&A is here: On Your Side column in The National newspaper
This is a broad subject so I just want to touch on a few major points.
There are both limited (fixed) and unlimited contracts and different rules apply, especially on leaving employment. Limited contracts have significant penalties if you want to leave before the end of the fixed term. Limited contracts are common in education and the medical profession.
Employees leaving a company in the first six or 12 months can receive an employment ban although this is far less restrictive than in the past.
Unless you are single and have funds to support yourself for some time, it is unwise to move to Dubai without a job. This is a costly city and there are no guarantees of employment once you are here. Far better to obtain a job before moving and also to have negotiated a decent salary package as pay increases are not common.
Note that your employer is obliged to pay for your residency visa, and any other costs associated with employing you and is not permitted to pass them on. They are not obliged to cover the costs of you sponsoring your spouse or dependents so you may need to pay for their visas and identity cards.
Many people work for themselves but you cannot simply set up and run a business. You need a trade licence and you are looking at paying at least AED 20,000 a year for this. There are different types of companies and licences depending on the type of business you wish to run. There are a number of specialist companies who can assist with setting up a company if you don’t want to do the legwork yourself.
Be aware that undertaking any kind of work, or taking money even for a hobby business is illegal without a licence, as is operating any food business from home for expats. For Dubai residents who already has a residency visa, whether directly sponsored or by a spouse, there is a cheap option that costs in the region of AED 1,500 a year but is only for specific activities, mainly consulting and selling items that you make yourself. This the DED eTrader licence.
Dubai has a wide range of schools, with different curricula. School fees are not cheap however, and tend to increase above the rate of inflation, and salary increases, each year. Ideally you negotiate a salary package that cover school fees, or if that is not possible, you need to fully explore the options and ensure that your income is sufficient to cover the fees and all the add-ons.
For a Western style school, fees vary significantly but average AED 40,000 to AED 60,000 a year for primary schooling and AED 60,000 to AED 90,000 for secondary education. Sixth form fees are higher still.
For anyone employed on a Dubai residency visa, their employer is legally obliged to provide medical insurance in line with DHA (Dubai Health Authority) rules. Employers are not obliged to provide cover for dependents so if they do not the responsibility lies with their sponsor, usually the spouse or parent.
All policies cover pre-existing medical conditions and include maternity cover. Basic, and cheap, cover is available for lower paid employees and domestic staff.
There is also mandatory medical insurance for anyone on an Abu Dhabi visa but not for the other five emirates. With the cost of treatment, it would be foolish not to arrange decent medical insurance.
As soon as you have your UAE residency visa you need to change your driving licence to a local one. For most Western expats this is simply a process of exchanging a licence for a Dubai one, or other emirate depending on your visa. Note that you can only drive on a home country licence until a visa application is made so you will have a period of a few days where you should not even drive a rental vehicle.
Generally, only residents with UAE licences can drive personally owned vehicles. With insurance company permission, some first -degree relatives may be able to do so on a tourist visa.
Is your existing cover still valid if you move to the UAE? Not all plans are, and even if simple life polices remain valid, often plans with additional benefits such a critical illness cover may not be.
You can find general information and facts on protection policies in these articles.
Mortgages and property
If you own a house with a mortgage and plan to rent it out in your absence you will require the permission of your lender and may require additional insurance.
Most expats rent an apartment or villa in the UAE but be aware that rent is usually payable quarterly or half-yearly. Facts on rental law here: Rental laws in Dubai
We all pay a Municipality charge of 5% of rent payable (or equivalent if owned) and this is added to the monthly DEWA (Dubai Electricity & Water Authority) bill.
If you decide to buy somewhere you can find out more about the process here: Buying property & getting a mortgage in Dubai
If you want to buy property in the UK, or elsewhere, while resident in the UAE you can do so but it is a more complex process.
Useful financial tips
- Watch where you shop. Prices can vary significantly between supermarket chains. Consider buying non-familiar brands as ones from a home country can be pricey.
- There are lots of discount and voucher schemes for cafes, restaurants and attractions and these are commonly used.
- As this is a fairly transient city there are always people leaving and selling furniture and white goods. Bargains can be had if you need to kit out your new accommodation.
- Check out store loyalty cards as these can be worthwhile.
- Do not take on any major commitments at outset. Instead, rent a car, rent a cheaper apartment until you are sure that you will be staying and are sure of your budget
- Avoid cold-callers trying to sell you financial products, especially 20-25 year savings plans
- Keep a budget of your expenditure so you get a real idea of where your income is going
- Always keep an emergency cash fund as you never know what is around the corner
Here’s a handy guide to the mistakes you really don’t want to make: 10 financial mistakes to avoid
To arrange a discussion on any aspect of your personal financial planning, please email me at email@example.com
I write articles such as this one as part of the holistic personal financial planning service and that I provide to expats, and the general consumer, financial and legal information that I provide in The National newspaper, on Capital Radio UAE, and on the Facebook group British Expats Dubai.
Please take a look at the other useful articles on this website.