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The UK's proposed tax overhaul for non-residents has set off a flurry of inquiries, particularly among NRIs residing in the country. With the government's plan to amend tax regulations, especially targeting overseas income, NRIs are exploring avenues to shield their assets from potential tax burdens.
Previously, non-domiciled individuals enjoyed a tax exemption period of 15 years, but the reduction to just four years has prompted a reevaluation of financial strategies. NRIs are now actively seeking ways to safeguard income generated by their Indian assets from increased taxation.
One popular strategy involves establishing tax-friendly ownership structures in alternative jurisdictions such as Dubai, where minimal personal taxation and lifestyle amenities akin to global financial centers make it an attractive option.
Dubai's allure as a global tax residency destination is growing, particularly among NRIs and recent UK residents with limited residency tenure. The prospect of facing higher tax rates in the UK, ranging from 40% to 45% on income like dividends and rents, is steering NRIs towards Dubai's zero personal income tax environment.
Moreover, the UK's estate tax, set at 40%, poses challenges for succession planning, contrasting with India's exemption on such activities. This shift in the UK's tax landscape may dampen its appeal among prospective residents, with Dubai poised to emerge as a preferred destination for the Indian diaspora seeking favorable tax conditions and financial opportunities.
While the UK has been historically favored by wealthy Indians for its benefits like healthcare and education, the impending tax reforms may alter the calculus. As Dubai gains traction as a tax-friendly hub, wealthy individuals are reconsidering their residency choices, with Dubai's allure bolstered by its favorable tax environment and promising lifestyle offerings.
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