Home » Expat Focus International Finance Update 29 March 2017

Expat Focus International Finance Update 29 March 2017

Thousands of UK expats get non-dom tax shock

Thousands of expats returning to the UK may be facing significant tax bills when new non-domicile regulations take effect from April.

According to one national British newspaper, the Finance Bill will reduce the tax perks enjoyed by people whose ‘domicile’, or permanent home, is overseas.The move will see new limits being imposed on the British expats’ ability to keep their offshore income out of the UK’s tax net.

For expats who have lived in Britain for at least 15 out of the last 20 years, their permanent non-dom status will effectively be abolished, the Financial Times says.

Also, expats returning to the UK but who have a permanent home overseas will also see the removal of their non-dom status.

The moves have already created a stir in Singapore and Hong Kong where large numbers of British expats are working in legal and financial services.

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Tax experts there are being approached by Brits looking to return home and enquiring about the new rules and what the impact will be on their long-term financial plans.

The government says it is addressing what it calls the ‘fundamental unfairness’ enjoyed by non-domicile taxpayers.

It appears that expats returning to the UK will now be taxed on any gains and income from their offshore companies and trusts owned by them. Some expats may also be dragged into the country’s inheritance tax net.

World's most expensive countries for expats

An extensive study of prices being paid by expats around the world has revealed that the most expensive big city for them to live in is Singapore. The cheapest for expats is Kazakhstan’s Almaty.

The findings come from the Economist Intelligence Unit who publish their worldwide cost of living survey every year by looking at the cost for 150 purchases in 133 cities.

The upper end of the table is dominated by cities in Western Europe and the Far East.

However, Singapore has now topped the chart for four consecutive years and it’s followed in the most expensive stakes by Hong Kong, Zurich, Tokyo and Osaka.

The top 10 is completed with entries from Seoul, Geneva, Paris, New York and Copenhagen.

London is now in 24th place thanks to the fall in the value of sterling after it was ranked in sixth position last year.

After Almaty, the cheapest cities for expats are Lagos, Bangalore, Karachi and Algiers which tied with Chennai.

Meanwhile, a survey from the InterNations expat community has revealed which countries expats are working the longest hours in.

The responses from 14,000 people of 174 nationalities and who are working in 191 countries revealed that the average working week being clocked by expats is 44.6 hours.

The longest working week for expats is for those working in Tanzania with 50.9 hours, followed by Uganda and Nigeria, Romania and Kenya is in fifth spot with 48.9 hours.

EU expats in UK to keep benefits

A British newspaper has reported that under Brexit plans, the benefits enjoyed by EU migrants will continue after the UK leaves the European Union.

This means the contentious issue of expats claiming child benefit to send to their families in their home country will be unaffected.

The Sunday Times says it has seen papers submitted to the Cabinet which will recommend that the EU’s three million migrants working in the UK will retain their rights to state benefits.

However, those who arrive in the UK after Article 50 is triggered will not get access to benefits.

One reason given by ministers for the contentious issue over EU citizens accessing benefits is to help protect the pension and healthcare rights of British pensioners living in the European Union, particularly for those in Spain.

Shocking savings statistic for GCC expats

A survey of expats in the Gulf Co-operation Council region (GCC) has revealed that 65% of expats working there are not saving for their pension.

This lack of retirement planning leaves expats behind workers in Europe, North America and Asia.

The findings from Guardian Wealth Management show that expats are ‘enjoying the high life’ rather than saving for their futures, though they say the demography of expats there could be an explanation.

A spokesman for the firm said: “We discovered this year that more than half of expats do not have a retirement fund which is shocking.

“GCC expats are behind other expat regions because the high tax-free salaries there makes it easier to spend their earnings rather than save.”

The survey also showed that 24% of expats who had a pension said that it was based in their home country.

However, the survey revealed that most respondents are less than 30 years old, with many not necessarily putting in plans for their retirement at a relatively young age.

Opportunities for expats to be restricted

News outlets in Saudi Arabia are reporting that the country is planning to tighten restrictions on expats working in the kingdom so that employers will be forced into hiring more Saudi citizens.

The move is part of the kingdom’s announcement last year that it will ease joblessness among Saudis to 9% within three years from its current 12%.

With the expat population of 12 million people, critics say the move will lead to costs rising and jobs going unfilled since they are shunned by most Saudi citizens.

According to one news agency, the new policy has been approved by the country’s labour minister and will be introduced in September with an official announcement expected soon.

Meanwhile, the Ministry of Public Works in Kuwait has announced that it is planning to replace all of its expatriate employees with Kuwaitis. The transition will take five years to complete.

Calls for expat money transfers to be monitored

Big money transfers being made by expats in Kuwait could come under closer monitoring from authorities there after an MP called for action.

He said that between 2010 and 2014, expats remitted KD 21.2 billion (£55.4bn/$69.7bn) and he now wants the country’s Finance Ministry to impose charges or taxes on the money transfers.

The move follows previous calls for expats’ money transfers to be taxed to help stem the flow of capital outflow from the country. Now the MP says expat money transfers should be subject to a 5% tax.

Frozen pensions of UK expats could be lifted

The UK’s Labour Party has announced plans to tackle expats struggling with frozen state pensions.

They say that expats in a range of countries, including Canada and Australia, have their state pension frozen while those in other countries see their pension being increased annually.

Now they want to force a vote by MPs that will see the unfreezing of state pensions in the coming weeks.

The result could see expats receiving a 2.5% hike in their pension payments like other expat retirees around the world.

Among those countries that do not have frozen pensions for British expats are Jamaica and the US.

In addition, the Brexit negotiations have also highlighted a potential threat for freezing the pensions of 472,00 expats in the European Union.

The move has been welcomed by expat pensioner campaigners who say that some expats who retired when the basic rate was £67.50 in 2000 are still receiving that amount rather than the current rate of £122.30.

Labour Party leader Jeremy Corbyn hailed the move as ‘a chance to make an historic change’ to the UK’s pension system and end discrimination against many British retirees living abroad.

Job opportunities rocket in New Zealand

The number of job opportunities in New Zealand have rocketed, with openings for expats across a number of sectors.

Job platform SEEK says it saw a 17% boost in job ads in February with a big demand for workers in information and communication technology.

There’s also a growing demand for workers in manufacturing, trade and services as well as transport and logistics.

When the figures are analysed, Auckland saw a 19% year-on-year increase for job opportunities being advertised, while in Wellington the increase was nearly 12%.

A spokeswoman for the website said: “For jobseekers in New Zealand, February was a great month with strong year-on-year job growth across several industries that have large employers.”

Meanwhile, it has been revealed that the number of Americans who have applied for citizenship in New Zealand soared by 70% in the 12 weeks after President Donald Trump was elected.

The immigration records were obtained by a news agency which also revealed that the number of American expats gaining a work visa in January rose by 18% compared with the year before.

The number of Americans tourists visiting New Zealand has also increased.

In other financial news…

Mobile phone firms in South Korea have been fined by regulators after attracting expats there with illegal benefits. Three firms have been fined after they were found guilty of offering expats subsidies in excess of legally defined terms. Investigators found more than 5,300 expats had enjoyed better deals on tariffs than South Koreans.

A new body has been created in the UAE to help protect expats from being exploited. The service will now replace recruitment firms that bring domestic workers, among others, into the country in an industry overhaul. Now there are strict criteria for recruiters to meet.

Arab expats are increasingly interested in moving to the US under the country’s investment visa programme, says one Dubai-based lawyer. He says that there’s been an upsurge in interest from people interested in the move which needs a minimum of $500,000 to invest which will see a ‘green card’ being offered and the move could lead to citizenship.

Kuwait’s Ministry of Education has revealed that by reducing the expat teachers’ housing allowance the country will save KD 22 million (£57.5m/$72.3m) every year. Media there are reporting that since the decision to reduce the housing allowance was announced last October, the country has saved nearly KD 11 million.

The Isle of Man has unveiled a simplified work permit process for expats wanting to work there. The permit for seasonal workers in the tourism industry offers an exemption process. Moves are also afoot to bring in changes that will benefit the construction industry.

Expats working in Indonesia’s construction industry may be alarmed with news that the country is going to restrict expat numbers by limiting them to specific jobs – mainly as directors and specialists.

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