I have been warned about this thing myself and also from reading a few sources online. Most foreigners are lured to Dubair in search of the wonderful tax-free income.
A bit of online research shows that even though we don't pay tax to Dubai, if you plan to go back to your native land, then you are under the obligation to keep paying taxes to them. The Tax Authorities decide if you are still a resident of your home country, depending on, for example, such as length of time away from your home country, bank accounts, property ownership etc.
I am sure most people don't have a clue about this, and therefore innocently fail to declare the money they have earned overseas, however, ignorance of the law is not an excuse, as you know
Does anybody have any more information on this?
do expatriates pay taxes back home?
By suratBG - Posted on April 1st, 2009
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itdepends on your home country. for the UK, you must to be out of the country for a complete tax year -April to April
Your best bet is to seek professional advice from a tax expert in your country of origin, or from the government of that country itself. I guess that , like the UK, they must have loads of information on their site regarding tax for expatriates
I am going to tell you a few basic things about how it works in Australia. Australian residents must pay Australian income tax on any and all income that is not otherwise exempt: s 6-5(2) of the Income Tax Assessment Act 1997 (ITAA97). This includes money derived from foreign sources. Non-Australians must pay income derived from Australian sources: s 6-5(3) (see http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s6.5.html). You are also required to include in your Australian assessable income any amount that is considered to be statutory income: s 6-10.
The definition in s 6 means it is important to determine whether you are an Australian resident for the purposes of ITAA97. The definition of the expression in s 995-1 of ITAA97 unhelpfully says, in effect, you will be a resident for the purposes of ITAA97 if you would have been a resident for the purposes of the Income Tax Assessment Act 1936 (ITAA36). That section suggests a resident is:
(a) a person, other than a company, who resides in Australia and includes a person:
(1) whose domicile is in Australia, unless the Commissioner is satisfied that his permanent place of abode is outside Australia; [or]
(2) who has actually been in Australia, continuously or intermittently, during more than one‑half of the year of income, unless the Commissioner is satisfied that his usual place of abode is outside Australia and that he does not intend to take up residence in Australia;
I assume (2) doesn't apply to you, so the question is: Do you reside in Australia? That is a question of fact, and the term 'reside' is given its ordinary meaning. To determine whether you are a resident, the Commissioner would usually consider factors like:
your usual place of abode (in your case, Dubai);
the location of your family (if any, including wife, children, parents etc);
where you keep your personal effects (with you in Dubai, I imagine);
the purpose, frequency and duration of visits;
your nationality and citizenship (Australian, I guess); and
any social ties you have with Australia.
You may still be considered to be domiciled in Australia if you were born there. Arguably, you have elected a new jurisdiction to serve as your permanent home or place of abode, ie the UAE. The factors relevant to determining your place of abode are listed in income tax ruling IT 2650, which is available online. (It also includes a discussion of the other part of the definition in s 6 that was covered in TR-98/17.)
If you are sending money back to Australia, the ATO will find out about it. If it is being held in an Australian bank account, for example, it will accrue interest that will be considered to be assessable income.
I hope I was of some help.