Let's Know about UAE tax for US citizens living in UAE

 

The UAE (United Arab Emirates) has an expatriate population about 10 million and is globally known as the center for finance and commerce in the middle East. The UAE is increasingly promoting itself as a tax haven. If anyone who is an American expat, but he or she continues to be subject to US expat taxes no matter where that person lives. This somewhat dilutes the low tax appeal of the United Arab Emirates. This post will help you understand your tax responsibilities as a US Expat else in the UAE.

Know about taxes for US citizens living in UAE

There is no federal tax legislation in the UAE, and the UAE is considered a non tax nation. Currently, there is no income tax, corporate tax with no withholding and capital gain tax. Some businesses, particularly in the finance and petroleum producing industries are subject to taxation but most corporate entities are exempt. But, the United Arab Emirates has introduced s value added tax (VAT) of upto 5 percent on goods and services since Jan 2018 unless a special exemption applies.

Let's know about the tax due date in the UAE

There is no income tax collected from individuals, and filing a return is not needed. Overseas income is not taxed by the UAE that means you just need to worry about your US taxes.

Let's know about taxation of US expat in the UAE

If you are an US expat or permanent resident, you are obligated to file US expat taxes with the federal government every year whether you live in Abu Dhabi or Albuquerque. You could be required to file an informational return on your assets held in overseas bank accounts. Also, while the US is one of the few Governments that tax worldwide income of its citizens as well as permanent residents.

The overseas earned income exclusion let's you decrease your 2020 taxable income by the first $105,900 earned as a result of your labor while a resident of an overseas nation.

 The foreign tax credit that could let you lower your tax amount on your remaining income by certain amounts paid to an overseas government. On the other hand side, a foreign housing exclusion let's an additional exclusion from taxable income for certain amounts paid for household expenses that happen as a consequence of living abroad. With right planning and tax preparation, you must be able to take benefits of these and other strategies to reduce or even eliminate your liability on US expat taxes.