As the US-Iran war continues to escalate, the new travel tax rules are expected to change or shift. As a result, details like tax position and residency might not always be revisited straight away.
Experts suggest that even if the underlying position of some taxes gets changed without being recognized, the rules won’t be revised or updated. In these times of increased uncertainty, it is natural for decisions to be guided by what feels right for family or immediate circumstances.
At St. James’s Place, advisers are noticing that more clients are reviewing their position as travel patterns shift. This is especially impactful in areas where financial arrangements span multiple countries. For many, these changes seem temporary. However, in practice, even small shifts in how time is spent can have huge effects that are easy to miss.
In line with this, Tony Smith, Head of tax, technical and advice delivery, St. James's Place Asia & Middle East, explains, “Where people tend to come unstuck is not the tax rules themselves, it’s assuming their situation hasn’t really changed. If you’ve spent more time in another country than planned, even by a few weeks, that can start to affect how your position is viewed.”
Most tax systems assess residency year by year, based on what actually happened over that period. It is not just about how long you intended to be away. This usually includes the following factors:
An individual’s center of vital interest
The number of days spent in each country
Access to accommodation
It also includes where the person’s work is performed and their broader personal or economic ties. These factors can shift more easily than expected. A few additional workdays, longer stay, and frequent travel can change the overall tax rules. For UAE-based expats, this is where assumptions tend to fall.
Living in the UAE might not automatically exempt you from taxes in other countries. Income can be taxed where it is earned, and residency status will include wider obligations. However, to maintain a balanced tax regime, double taxation agreements, such as the one between the UK and the UAE, can help. This would help in preventing the same income from being taxed twice. But they do not remove the need to determine residency correctly in the first place. Well, as of now, these rules can act as a moment of relief.