Since 2019, more than 150,000 Golden visas have been issued in UAE. Many expats, including HNWI (High-net-worth-individuals), are planning to abandon their U.S. citizenship. A recent report suggested that in the first three quarters of this year, 2022, approximately 2872 high-net-worth-individual expats have renounced their U.S. citizenship. That number exceeds 2421 last year.
About 1 in 4 U.S. expatriates in UAE are considering and planning to renounce their citizenship, according to a recent survey from GETS (Greenback Expat Tax Services). The main reason the expats are trying to renounce their U.S. citizenship is the filing taxes in the U.S. This survey also suggests that approximately 77% of expats think that if they live abroad, they do not have to pay taxes.
U.S. expats face demanding tax filing requirements
U.S. expats must pay annual income taxes in the U.S. on their worldwide earnings, inclusive of their salaries, all their business profits, investment income, and more. Although U.S. officials have measures to prevent double taxation, including foreign income exclusion and the tax credit, most U.S. expats still oppose these measures due to the dual filing requirements because that requires more time and all the expenditures that come with preparing returns.
There are better options than using the United States, especially if you are a U.S. citizen. It’s elementary to get caught up in the U.S. tax net. You can guarantee the U.S. will tax you if you are a U.S. person (a U.S. citizen or green card holder).
Ways to get rid of high taxes for American citizens
The U.S. is one of the countries that require taxes on American citizenship. So, if you are a citizen of the U.S., then you must pay taxes even if you are residing here within U.S. or not. But there are possible ways to eliminate high taxes based on American citizenship, including the trifecta method. This method gives you a solution to avoid tax residency in the U.S. Still, it could be better and will only work if you plan accordingly for your tax structure.
The U.S. is one of the countries that require taxes on American citizenship. So, if you are a citizen of the U.S., then you must pay taxes even if you are residing here within U.S. or not. But there are possible ways to eliminate high taxes based on American citizenship, including the trifecta method. This method gives you a solution to avoid tax residency in the U.S. Still, it could be better and will only work if you plan accordingly for your tax structure.
About 183 rules and the trifecta method
The thing is, if you are spending more than half a year in a country, then you become a tax resident of that country. Now, most citizens use this as a rule and think that the taxes will get excluded if they spend less than 183 days in the country. So, it works like if you are spending more than 183 days in a country, then it will automatically pull you out of the country’s tax net, but spending less than that is not guaranteed that you will not pay taxes.
Also, not all western countries operate under this rule; as for U.S. citizens, there is a trifecta method that is one step further than the 183 rules. But still, that is not as perfect as this method will work for you if you plan your tax structures and not work out if your tiers are in one place or country as failing the center of life test. This trifecta method suggests that you only spend one-third of the year in a country. If you do not get failed on these tests, then this method might lead you to live zero-tax life, which is impossible for U.S. citizens most of the time. So, that is why Americans are trying to dump their citizenship and relocate to other countries, especially GCC nations, including UAE. There is the also another way to avoid taxes from the U.S. is to pay taxes somewhere else, like paying taxes to a different country can save you from U.S. high tax rates. In that case, most countries will not be able to charge you for double taxation.
Golden opportunities for high-net-worth individuals in UAE
Due to the uncertain economic situation and increased inflation world widely, there is a net loss of millionaires noticed from the most powerful developed countries. And it results in increased interest in investments on the way to GCC (Gulf Co-operation Council) nations, especially towards UAE.
The population in UAE consists of approximately more than 88% of expats. Out of 10.08 million people live in the UAE, almost 8.92 million are expats. The UAE has become an attraction to all as an expansive inflow of the HNWI (high-net-worth individuals) is noticed. Predictions suggest that four thousand millionaires will be relocated this year to UAE. The forecast showed that in 2022, the UAE’s financial wealth would reach $1 trillion with an annual rate of approximately 6.7%.
Blooming business opportunities in UAE
The international community of HNWI (high-net-worth individuals) wants to relocate to UAE because of the latest business and economic incentives launched to promote FDIs (Foreign Direct Investments).
On an international level, it is found that high technology and sustainable investments are reaching maximum height with Expo 2020. However, MOE (Ministry of Economy) have introduced initiatives to attract the world’s top entrepreneurs by offering them a quick business setup with flexible leases and low tax rates. These economic and progressive approaches attract top digital asset entrepreneurs, highly skilled talents, and wealthy foreign investors.
Also, the growth of investment funds will be 8.8 % more annually by 2026. UAE is the only country catering to luxurious lifestyles for all the HNWI compared to other affirmed cities such as Tokyo, New York, and many others.
Visa updates in UAE gain more popularity
The UAE updated its new visa policies and residency permits, which are gaining more popularity worldwide. These updates attract more high-net-worth individuals and high-end investors, making it the preferred destination for their investments.
In 2019, the golden visa scheme was launched in UAE to encourage foreign entrepreneurs, investors, and highly skilled professionals to root their residency here in the UAE. Golden visa offers a 10-years residency permit that is available with automatic renewal. Also, there is a green visa that offers a 5-year residency permit. Entrepreneurs are also eligible for a business visa after starting a business in the UAE.
With quality and luxurious lifestyle, the best healthcare system, and a stable economy Dubai attracts all high-net-worth individuals. Here HNWI will continue to explore more about the high standards of living, legally protected wealth preservation, and agile approach to promoting investment migration.