Leaving the Gulf States? A tax guide for expats
Foreigners from around the world flock to the Gulf States for tax-free salaries, year-round sunshine and a high standard of living. But when you leave, it’s crucial to make sure your tax affairs are in order to avoid unexpected complications. Here’s what you need to know.
Niel Pretorius ● Mar 24, 2025
While there are options to stay for longer, most expats tend to remain in the region for between two to five years. If you have decided to move back home or relocate elsewhere, it’s essential to make sure you understand how your tax residency status will change, and the implications thereof. A lack of planning could lead to unexpected tax liabilities.
Understanding tax residency
One of the most important aspects of your financial planning is understanding your tax residency status. Tax residency determines where you must pay taxes, based on factors such as physical presence, domicile or economic interests.
Generally, you’ll be considered a tax resident of the country where you spend the majority of your time during the tax year. Each country has different rules, so where you move next will affect your tax obligations.
South African expats
If you're a South African expat returning home after spending several years in the Gulf States, your tax residency could change.
South Africa’s tax regime is a residence-based system and has two main tests to determine tax residency.
SARS uses the ordinarily resident test and the physical presence test to determine your tax residency.
The ordinarily resident test looks at where your permanent home is, where your family lives and whether you keep personal ties in South Africa or return regularly. If you haven’t formally tax emigrated and still regard South Africa as the home you plan to return to, then you are likely to remain ordinarily resident for tax purposes in South Africa during your period working abroad.
The physical presence test checks how long you've been in South Africa. To be classified as a non-resident, you must spend fewer than 91 days in South Africa in the current tax year, fewer than 91 days each year over the past five years, and no more than 915 days in total over those five years.
Whilst you may remain ordinarily resident in South Africa, the provisions of a tax treaty may determine that you are tax resident in another jurisdiction. These provisions revolve around where you have a permanent home available, your centre of vital interests and where you are habitually resident.
South African tax residents working abroad (and not deemed non-resident under a Double Taxation Agreement) can make use of the expat exemption, which provides tax relief for foreign employment income up to R1.25 million per year of assessment.
UK expats
British expats returning to the UK will similarly have a change to their tax status. If you become a non-UK resident for tax purposes, you will typically pay UK tax on any UK-sourced income, subject to exceptions as determined by the applicable tax treaty. Those moving back to the UK will revert to being UK-tax resident and liable for tax on their worldwide earnings, with some exemptions if you have been out of the UK for the last 10 years.
In the UK, your tax residency is primarily determined by the number of days you spend in the country during the tax year (6 April - 5 April).
If you spend 183 days or more in the UK during a tax year, you will be considered a tax resident. The UK also uses the Statutory Residence Test that looks at your ties to the UK as this can reduce the number of days spent in the UK, to determine an individual’s residence status.
There has been a sea change in the tax treatment of returning residents who have been out of the UK for more than 10 years, which relate to income tax, Capital Gains Tax, as well as inheritance tax.
Plan ahead
If you’re leaving the Gulf States, don’t leave the financial planning to the last minute.
- Sorting out your tax residency status, restructuring investments and dealing with visa applications (if not returning to the UK) can take six months or more.
- Some financial decisions (such as setting up an offshore trust or rebasing the capital values of assets) should be done well before you move.
Common mistakes and how to avoid them
Making the wrong financial decisions when relocating can be costly. Here are some easy mistakes to avoid:
- Failing to notify tax authorities: Not informing HMRC or SARS about your change in residency status could lead to unexpected tax liabilities.
- Find out about local tax laws: Each country has its own rules, and what worked in the Gulf States might not be applicable in your new home. Even tax rules back home can change drastically in the time of your absence. Understanding how your income and assets will be taxed is crucial.
Moving from the Gulf States to another country, whether back to South Africa, the UK, or elsewhere, can be exciting but a bit overwhelming. There’s a lot to think about and it's important to do your financial planning before you leave to avoid unexpected and costly mistakes.
Our expert advisers will be in Dubai, Abu Dhabi, Riyadh and Doha from 7 to 13 May and would love to meet with you for an in-person consultation to give you valuable, complimentary advice on how to ensure a smooth financial transition when you leave the region.
Spots are free but limited, so book now to make sure you don’t miss out.