UK NRIs seek Dubai residency to avoid new tax measures

The The proposed taxation of the overseas income of non-UK domiciled residents by the United Kingdom government has triggered a rush among wealthy non-resident Indians there to establish taxfriendly ownership structures in alternative jurisdictions, experts said.

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The UK government's plan to significantly alter its tax system for non-residents starting in April next year has sparked a surge in client inquiries, particularly from NRIs living in the UK. Previously, non-domiciled individuals like NRIs were taxed solely on their UK-based income. However, the government's proposal to reduce the exemption period to four years from 15 has disrupted financial planning for many.

As a result, NRIs are actively exploring options to safeguard the income generated by their India-based assets from higher taxation.

"Families who hold nonUK situs assets would look at alternate jurisdictions to create holding structures that would safeguard it from taxes in the UK under the proposed regime," said Suraj Malik, managing partner of Legacy Growth, a firm that advises India's wealthy individuals.

"Families are also contemplating disconnecting the control of UK-based beneficiaries from the assets through multiple layers of entities or trusts in jurisdictions such as Jersey, the UAE or Singapore." Dubai is emerging as a preferred destination for global tax residency, especially for prospective NRIs and recent UK residents with less than six to seven years of residency.

The potential tax reforms in the UK could propel Dubai to the forefront of choices for Indian NRIs seeking favourable tax conditions. With minimal personal taxation and a lifestyle akin to other global financial centres, Dubai is an attractive option for those looking to mitigate their tax burden.