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Know whether or not an expat should pay income tax on income earned in the UAE when repatriating

Everybody is aware that UAE is a tax-free country. UAE did not impose any taxes on expats working in the country. But when they return to their home country after the quitting the job in UAE they will become a tax paying citizen of the country in which they resides.

“While your income still may not be taxed in the UAE, after you leave the country, depending on the country you are moving to, any income earned abroad is treated differently when you are a non-resident versus when you become a resident of that country,” said Dixit Jain, managing director at The Tax Experts DMCC.

“Suppose your global income is taxed abroad, then you may check if there is a Double Taxation Avoidance Treaty (DTAA) between the countries, if yes then you may be able to claim the credit of taxes paid in the other country while filing return in the recently moved country. “However, that applies only if one moves from one tax-paying country to another tax-paying country and does not apply to this situation,” Jain added.

Also Read: Health check-up for 1 UAE dirham offered in UAE 

At present in India, an Ordinary Resident (ROR) is liable to pay tax on his global income, while an NRI is liable to tax on the income ‘earned’ in India. When an Indian returns to the country, he can save tax on their overseas income through their Residential Status until a period of two years after return.

As per the Indian law, NRI status  of an expat after returning to India will be deemed as ‘Resident Not Ordinary Resident’, (RNOR) status for two years. It will become ROR (Ordinary Resident) if the conditions of RNOR is not satisfied in his case.

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