United Kingdom launches effort to woo citizens who moved to Dubai for 0% income tax amid Gulf War

[The Financial News]  As geopolitical risks in the Middle East intensify, the Government of the United Kingdom has taken an unusual step to bring its citizens living in Dubai back home.
As the latest Gulf War has shaken Dubai's image as a safe haven, the British government is moving to attract Britons living there.
On the 21st local time, CNBC reported that about 240,000 Britons in the UAE had chosen Dubai for its tax-free income, public safety, excellent international schools and glamorous lifestyle, but are now gradually leaving, prompting the British government to try to win them back.
Across the UAE and other Gulf region countries, flights are being repeatedly disrupted by missile and drone attacks from Iran, and concerns are growing that life in Dubai is no longer stable.
According to the Financial Times, about 30,000 Britons living in the UAE, or one in eight, had already left since the conflict began on Feb. 28. Many are parents worried about their families' safety and entrepreneurs revisiting business plans. As schools shift to remote classes, more families are choosing to return home for their children's education.
Seizing on the trend, Rachel Reeves, Chancellor of the Exchequer, has been actively courting them. In a recent interview with CNBC, Reeves said, "The United Kingdom has the lowest corporate tax rate among G7 countries," highlighting investment incentives and a competitive tax system.
HM Treasury is reportedly reviewing tax reforms to attract wealthy expatriates. The plan is to boost London's appeal as a financial center, including a temporary stamp duty exemption for listed companies in London, and draw in capital and talent leaving Dubai.
But contrary to the government's expectations, the response on the ground has been lukewarm.
While the UAE keeps its income tax at 0%, the United Kingdom imposes income tax of up to 45% on high earners and is also moving to raise capital gains taxes.
Stallone Sheikh, CEO of Alliance Street Consulting, said, "The current tax reform plan in the United Kingdom is not very attractive to ultra-high-net-worth individuals," adding, "It feels like the United Kingdom is punishing people who make money rather than encouraging them." In fact, many Britons leaving Dubai are looking not to their home country but to third countries such as Spain, Portugal, Thailand or Bali, where living costs are lower and tax benefits are available.
Experts say the situation marks a crack in Dubai's migration history, but they add that it remains to be seen whether it will lead to a mass return. Dominique Boileau, CEO of Henley & Partners, said, "Families that are free to move internationally make strategic, long-term decisions," and added, "Once the war eases, many are likely to return to Dubai."


jjyoon@fnnews.com Yoon Jae-jun Reporter