Home » Expat Focus Financial Update 01 December 2016

Expat Focus Financial Update 01 December 2016

Best country for expats looking for prosperity

The best country in the world for expats looking for prosperity is New Zealand.

The global prosperity index analysed 149 countries. The UK-based Legantum Institute promoted the country from fourth spot last year with the survey not just analysing incomes but other factors too, including employment opportunities and levels of education, personal freedom and the environment among others.The top five for most prosperous countries consist of Norway, Finland, Switzerland and then Canada.

Legantum says that global prosperity is now rising to unprecedented levels with big improvements in personal freedom being seen in Western Europe and Latin America.

Asia has seen improvements in health and education and there is now a better environment for business in North Africa, the Middle East and Eastern Europe.

The survey says that prosperity in North America has stagnated for the past 10 years, while Australia is seeing its prosperity decline.

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The report points out: “Countries cannot take prosperity for granted despite there being an upward trend. To keep prosperity rising means resolving ongoing conflicts and tackling the stagnation of the social outcomes for major developed economies.”

Over the past 10 years, prosperity in Canada has risen slightly and the US and Canada need to boost their safety, health and security levels to increase prosperity.

It’s this level of stagnating prosperity that is helping to fuel discontent among Americans, says the report. Even though the country has enjoyed a comparatively strong recovery from the financial crisis it has not improved the lives of many Americans.

The top 10 countries in the prosperity index are Australia, the Netherlands and then Sweden and Denmark, with the UK in 10th place. The bottom ranks of the index are taken up by the Central African Republic, Afghanistan and Yemen.

Meanwhile, New Zealand has announced that expats are still flocking to the country and pinpointed where their population hotspots will be over the coming years.

Hobsonville tops the list with a 254% population increase, south east Christchurch’s population will grow by 105% by 2023, and also in central Christchurch the population will grow by 83%.

In the year up to September, New Zealand saw 126,000 expats arriving to set a new record.

Future of expats in UK and EU set to be resolved

The future of British expats in Europe and European expats living in the UK looks set to be resolved in the coming months before Brexit talks begin.

That’s because, according to media reports, most European Union countries have indicated they are willing to agree to ‘reciprocal rights’ with the UK.

The newspapers report that senior government figures are saying that just a few of the 27 member states have yet to agree to the outline of these rights for British nationals in the EU.

However, while no deal has been officially struck, there may be an announcement at a crucial EU summit in December being held in Brussels.

According to the EU’s data, there are around 1.2 million British citizens living in the 27 EU member states and around 3.3 million EU nationals who are currently living in the UK.

Of those, most are Poles at 883,000, followed by citizens of Germany with nearly 300,000 and Romanians with 229,000.

Plans to tax expat incomes will hit GCC

The International Monetary Fund (IMF) has criticised plans for taxing expats’ incomes in the GCC to boost government revenues since this will make the region ‘less attractive’ and would lead to a ‘brain drain’.

The IMF is also warning against the taxing of expats’ remittances.

The move follows news that GCC countries are making plans for imposing value added tax (VAT) with some also said to be looking into boosting revenues with extra taxes and fees.

This would lead to the introduction of personal income tax for foreign workers and taxes on expat remittances and financial transactions.

The IMF acknowledges that by taxing income tax, the revenue across the GCC will be ‘substantial’ but with five of the six countries in the GCC employing 11.8 million expats, with 90% of those in the private sector, the move would make the region less attractive as an expat destination.

In addition, the organisation says that while taxing foreign workers will help to pay for infrastructure and public services and also create opportunities for employing more nationals, the move also means the GCC will risk losing skilled expats.

Meanwhile, a survey in Qatar has revealed that just 13% of expats said they would leave the country should the VAT rate of 5% be introduced in 2018.

Expat numbers rise in Saudi Arabia

The number of expats working in Saudi Arabia has risen by 12% to reach 11.6 million people.

Around 1.4 million expats arrived in the kingdom this year, according to government data.

Among those, the number of female expats grew by 13.6% to number 3.6 million, while the number of men grew by 900,000 to reach 8.3 million.

It also appears that the Saudi population is in decline; numbers fell by nearly 700,000 to 20.7 million people in 2016.

Expats are filling 72% of jobs in hospitality and tourism, though there are around 39% of Saudis aged between 25 and 29 who are unemployed.

High earning expats in China get account boost

High earning expats living in China will now be able to open a bank account without forex controls.

They can now create a ‘free trade account’ with a Chinese bank so they can circumvent capital controls; the government only allows individuals to buy US$50,000 of foreign currency every year.

This amount is believed to too low for most high net worth individuals who also need to make frequent money transfers across borders.

However, the new accounts are restricted to expats who meet the specific requirements laid down by the government.

The People’s Bank of China says it will monitor closely capital flows and for the movement of capital through the country.

Australia lowers 'backpacker tax’

Expat backpackers heading to Australia will find the country has lowered its planned ‘backpacker tax’ from 32.5% to 15% after an outcry from the tourism industry and farmers.

Critics said the tax would make the country unattractive for temporary workers. Australia attracts around 600,000 backpackers to enjoy working opportunities from picking fruit and working on sheep farms.

Backpackers currently do not pay tax on their earnings if they earn less than AU$18,200 (£11,000/$13,500).

Best country for fostering talent named

The best country in the world when it comes to fostering business talent is Switzerland, according to a Swiss business school.

IMD has released its annual survey which reveals which country tops its rankings for attracting, developing and then retaining talent that will satisfy corporate needs.

In second place is Denmark and Luxembourg is third, with the Netherlands coming in fifth.

They are followed by Finland, Germany and Canada, with Belgium and Singapore completing the top 10. The US is in 14th place, the UK is 21st and France is 27th.

The school’s report says that talent and economic power to do not always go hand in hand, and those countries that rank highly show a capacity in shaping policies that preserve talent.

The survey questioned 4,000 executives working in 60 countries and asked them about their career and development when living in their country.

The research also points to northern Europe as being home to the largest concentration of business talent hotspots. Singapore has overtaken Malaysia as the best economy in Southeast Asia to attract and develop talent.

In other news…

Expats from Bangladesh and Nepal are being urged to convert their handwritten passports to new machine readable documents as soon as possible. A deadline was given last year for expats to change from the old-style passports but there are still many, particularly in the Middle East, who have not made the switch and appear to be unaware of the move.

The British Council says that expats from the UK should be encouraged to improve their language skills because they will be in demand once the country leaves the European Union. A survey reveals that speaking more than one language will boost their employment chances and help the UK’s future prosperity.

One of the problems for expats leaving the UAE is that their shipments of personal belongs are going missing. News reports reveal that 150 expats have been left without household items for several months and police are investigating these claims.

The French speaking part of Canada is launching a new scheme to attract those who can speak the language to move to the country. Employers in these regions can recruit French-speaking nationals directly on a temporary basis for highly skilled jobs.

British expats are being warned that the Chancellor’s Autumn Statement will see a tightening up of the QROPS pension rules. From next April, ‘Section 615’ schemes will be closed to new contributions; these schemes enable a UK company to set up a workplace pension scheme for employees working overseas but they are granted a number of unusual benefits including the ability for taking the pension pot as a lump sum.

Expats living in Korea are being offered free driving lessons in December to help them cope with the roads and pass the country’s driving test. The textbooks needed will also be free.

Expats in Qatar will now have 30 days to secure themselves a residency permit under the country’s new sponsorship law. The main change is that expats will need to apply to the government for an exit permit rather than to their sponsor which should make it easier to change jobs or leave the country.

British expats will not be put off from investing in UK property, says a leading lender, after the government announced a ban on letting agency fees. Skipton International says expats view their investment as a long-term prospect and they have not been put off by other measures, including the 3% stamp duty hike which came into force earlier this year.

A new commission is being created in Saudi Arabia to help bring to reality the country’s aim of Saudization, which could see 1 million jobs being created over the next 15 years for its citizens – mainly at the expense of expats currently in the kingdom. The aim is to introduce a scheme to develop the country’s workforce with the skills they will need to replace expats.

Expats in Kuwait could be hit with stiffer traffic penalties from January for a range of offences including parking in space reserved for disabled people. The current fines are expected to rise tenfold – and this is the second time in a year the country has increased its traffic fines. Some of these increases are only applied to expats who face paying up to $200 for each violation.

The government in Oman has announced that the labour visa waiting times will be drastically reduced from several months to five working days. In a bid to make this happen, expats could be issued with a temporary visa if they’re working in certain sectors to enable the speeding up to take place. Currently, most visas to work in Oman can take up to a year to process and are valid for two years in some industries. The move has been widely welcomed by the country’s business sector.

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