Any Bogleheads in Dubai?

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RevivedBogler
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Any Bogleheads in Dubai?

Post by RevivedBogler »

Any Bogleheads in Dubai?
aude
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Re: Any Bogleheads in Dubai?

Post by aude »

Only when employer is paying the bill. Not made for Bogleheads.
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RevivedBogler
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Re: Any Bogleheads in Dubai?

Post by RevivedBogler »

With no personal income taxes, and foreign earned income exclusion + deductibility for rent, I would imagine it is a very Bogle friendly place!
Valuethinker
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Re: Any Bogleheads in Dubai?

Post by Valuethinker »

RevivedBogler wrote:With no personal income taxes, and foreign earned income exclusion + deductibility for rent, I would imagine it is a very Bogle friendly place!
I am not sure if you are an American? My understanding is that there are particular issues for Americans as expats. As below.

Americans pay tax on their domicile, not their residence. The rules are complex, and seem to vary by state, but basically you must calculate your taxes based on your last US state of residence (as I understand it-- not an expert). Above a certain threshold (c. $85k pa?) they wind up paying tax to IRS and US state of former residence. They do get a tax credit for foreign tax they pay, with the IRS.

The result is Americans pay tax on the *higher* of the US tax rate and the rate in the country of residence. At least as I understand it.

The IRS and the FBI are aggressive on this (FATCA? is the legislation). All of us who deal with international financial institutions have to sign a W8n indicating the IRS should take no further interest in us (ie not US citizens). Bankers from UBS went to prison (and UBS paid a huge fine) for assisting American citizens to evade US tax. The net has tightened immeasurably since 9-11.

So I am not sure there are great advantages to an American of being in Dubai other than career advantages. The place is full of expat Brits for a reason.

The offshore financial services industry services expats very badly: dominated by opaque products with high fees.

Given the absence of creditor law (they put people in prison for unresolved debts) and other issues it is a problematic place to buy a property (or lease a car) with a mortgage. People got caught in 2008-- when your employer lets you go they apparently notify your bank who notifies immigration authorities who will confiscate your passport. And by all accounts you mustn't get caught in an auto accident with a local citizen: in all legal situations with locals you are presumed guilty until proven innocent.
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RevivedBogler
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Re: Any Bogleheads in Dubai?

Post by RevivedBogler »

Not entirely accurate = it depends on whether you believe your primary residence is in the US or not. If not (domicile is a matter of intention, validated by action, see IRS pub 555), no state taxes, 96k exclusion on foreign income + deductibility on rent (upto a certain amount). Since local income tax is nil, the effective tax paid to IRS (federal only) is lower at incomes close to the hurdle. Marginal rate is the same, so at higher amounts, the effective rate converges on marginal rate. For instance, if your income in Dubai is $90k, you would not pay US tax. This isnt' tax evasion. If your income in Dubai is $1M, you would pay your marginal tax rate on ~$910k.

And yes, hard to invest via foreign financial institutions for the perception created has resulted in the situation you mention below. But with a dollar-pegged exchange rate, transferring your local money onshore to the US for investing via your favourite broker (Vanguard, Fidelity, etc) is risk free enough.

Emerging markets of course do not have the same level of protections as developed markets. But, as always, the situation is far less dire or extreme than news reports suggest (in any case you shd not take on debt you cannot afford and plan for situations where you cannot make payments? i've not heard of arbitrary passport confiscations most certainly not if you work for a multinational company). I do agree that there is a higher risk for higher returns (not just the tax arbitrage, but 5% GDP growth does generate more opportunities).
Kalergie
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Re: Any Bogleheads in Dubai?

Post by Kalergie »

Hi there,
I live and work in Dubai. I'm from a Western European country but I have no ties to my home country with regards to taxes or assets. I am just about to build my bogle head portfolio. Not really sure yet what broker to use. I have td direct investing and saxo bank on my radar. Any suggestions? I feel saxo bank are very pushy to open accounts fast. It doesn't seem very legit. For example when I asked a sales person from saxo bank how They handle the submission of the W8 form for the IRS he said "I shouldn't worry about it. I live in Dubai so there's no taxes". That's clearly not true. As a comparison, td has the W8 form as a requirement to open the account. Td is much more expensive, no question. But to me it seems much more legit?

Anyone could share their experiences with Saxo?

Cheers.
jenlinc2006
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Re: Any Bogleheads in Dubai?

Post by jenlinc2006 »

Yes. Well, I am in Abu Dhabi. I am interested in if Bogleheads in the UAE can have a meetup.
Valuethinker
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Re: Any Bogleheads in Dubai?

Post by Valuethinker »

RevivedBogler wrote:Not entirely accurate = it depends on whether you believe your primary residence is in the US or not. If not (domicile is a matter of intention, validated by action, see IRS pub 555), no state taxes, 96k exclusion on foreign income + deductibility on rent (upto a certain amount). Since local income tax is nil, the effective tax paid to IRS (federal only) is lower at incomes close to the hurdle. Marginal rate is the same, so at higher amounts, the effective rate converges on marginal rate. For instance, if your income in Dubai is $90k, you would not pay US tax. This isnt' tax evasion. If your income in Dubai is $1M, you would pay your marginal tax rate on ~$910k.
Thank you for that. Credit Suisse today underlines the issues for very high net worths. I can see how it's less of an issue for an 'average' ex pat.

I was reacting to the general impression (probably by a non American poster) that this was heaven on earth due to low taxes. Not really. Not for Americans (above a certain income level). It's Essex on the Gulf for a reason.
And yes, hard to invest via foreign financial institutions for the perception created has resulted in the situation you mention below. But with a dollar-pegged exchange rate, transferring your local money onshore to the US for investing via your favourite broker (Vanguard, Fidelity, etc) is risk free enough.
Good point.
Emerging markets of course do not have the same level of protections as developed markets. But, as always, the situation is far less dire or extreme than news reports suggest (in any case you shd not take on debt you cannot afford and plan for situations where you cannot make payments? i've not heard of arbitrary passport confiscations most certainly not if you work for a multinational company). I do agree that there is a higher risk for higher returns (not just the tax arbitrage, but 5% GDP growth does generate more opportunities).
This I was very much confused by.

Are we talking about your portfolio? Then we globally diversify. If you lived in the UK you wouldn't only buy UK stocks. If you live in Dubai you definitely don't just invest in Gulf stocks and bonds! For more than a tiny fraction of your portfolio.

If we are talking about private investment it's a different game and not really a BH one. Yes you can invest in private businesses anywhwere and make a good return but caveat emptor.

On the debtor point. It hit a number of people in 2008. They play for keeps out there. You can be employed by a multinational one day, and not employed the same day. I have talked to expats out there who have bought property and they are apprised of the dangers-- as one friend of mine (a lawyer) put it:

1. he has the personal number of the Sheikh who is in charge of the organization he works for in his phone. He has never used it. It is for one purpose only-- to make a call if there is an issue with the police

2. he never goes anywhere without his passport and he is prepared, if necessary, to drive to the airport and leave, leaving all his possessions behind

(he was debating buying a flat, but I think he rents and bought back in the UK)

This does remind me of Moscow: one of the ad agencies. The tax police came through the front door with a battering ram (that's SOP in Russia, as is keepinga dual accounting system with 2 sets of books). The non Russian staff went out the fire escape, went to the airport and flew out-- leaving everything behind. Maybe Moscow is better these days (this would have been in the late 1990s).

But Singapore say is rule of law. Quite capable of exerting its authority but rule of law. DItto Hong Kong. Dubai? Different sort of place.

It's not to say one shouldn't work in Dubai, but one shouldn't presume one is immune from how the place works. The Middle East is funny about debt.
Topic Author
RevivedBogler
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Re: Any Bogleheads in Dubai?

Post by RevivedBogler »

Kalergie,
My sense is Saxo and Internaxx do not deal with IRS compliance. Better to use onshore US broker if that is what you are after. Or use ETFs based in Europe to accomplish same objectives without IRS compliance if you are not a US citizen.

Would be happy to meet in Kalergie and Jenlinc2006 in Dubai!
jenlinc2006
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Re: Any Bogleheads in Dubai?

Post by jenlinc2006 »

Well, seems like you're not here yet, but I'll put out a post seeing if I can organize a Boglehead UAE meetup.

UAE is a dream come true from a tax standpoint. I didn't follow this thread tightly enough to see what your situation was, but you just want to sort with an accountant at home what you should do to not be cut out of the benefits in your country as a result upon retirement. Don't make the common expat mistake so many European/North Americans etc. do in thinking that this luxurious setup does not come at a price (that is, unless you're a Boglehead, and planned accordingly!).
Kalergie
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Re: Any Bogleheads in Dubai?

Post by Kalergie »

@revivedbogler: I tried opening an onshore account with etrade a few months back but that's a no go for non-us residents. I have opened the account at saxobank just so I am ready to invest when I'm prepared to do so.
Regarding your point in investing in European etf . Well I followed a few threads on Ireland domicile ETFs by ishares and vanguard. However, these ETFs are a) very green as there is hardly any evidence on the performance of those funds and b) the number of holdings, the volume and liquidity does not seem to match super funds like VTI or VXUS by a long shot. The 30% dividend tax would be a welcome trade off in order to buy quality. At least until the Irish domiciled funds proof to be on the same level as their big brothers from he US.

One thing that I don't quite get so far. I read everywhere that if I do not trade with an IRS compliant broker (as in, the broker does not file the correct W8BEN form) I will get charged 30% on the total. My understanding is that if I buy VTI for 100$ and sell it for 100$, the IRS will withhold 30$ leaving me with 70$. Not a sweet deal! The saxobank reps deny that and say it's only he dividends that will be held at source. I am already thinking of just testing it, buy a share and sell it immediately and see what happens to get the answer? :)

Sure lets meet up. I am in motor city. :) pm me for details.
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6miths
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Re: Any Bogleheads in Dubai?

Post by 6miths »

My family and I spent 3 years in Al Ain, 70 miles south of Dubai. We arrived 10 days before 9/11. It was a very nice place to spend three years with a young family. As a Canadian, tax issues were much simpler than as an American ex-pat. Climate was great, life is simpler, net cost of living was very low and the people we met were wonderful. Best of luck with getting a local Boglehead meeting together. I am sure that there are many ex-pats in the UAE who are Bogleheads but don't even know it. Spread the word to your friends there.
'It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so!' Mark Twain
Topic Author
RevivedBogler
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Re: Any Bogleheads in Dubai?

Post by RevivedBogler »

@ Kalergie. Apologies for my delayed response. Are you a US citizen? If so (and quite possibly even if not), you can open an on-shore (US) account with a US address, and operate it with on-shore funds.
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Re: Any Bogleheads in Dubai?

Post by michaelsieg »

I currently have an offer to take a position in a neighboring country, also no income tax. Many people there go to Dubai for weekend trips. I have a green card and currently live in the US. So I could turn my green card in and then really have tax free income for a few years - but money is not everything in life. I will look at the opportunity carefully, but not sure, if this would be the right decision for my professional career.
But from a retirement savings perspective, this opportunity would allow me to be done saving within a few years...which is very tempting.
michaelsieg
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Re: Any Bogleheads in Dubai?

Post by michaelsieg »

Sorry, didn't want to kill the thread. But if I end up going there, I will PM you and we will have a local boglehead meeting :happy
kayanco
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Re: Any Bogleheads in Dubai?

Post by kayanco »

michaelsieg wrote:I currently have an offer to take a position in a neighboring country, also no income tax. Many people there go to Dubai for weekend trips. I have a green card and currently live in the US. So I could turn my green card in and then really have tax free income for a few years - but money is not everything in life. I will look at the opportunity carefully, but not sure, if this would be the right decision for my professional career.
But from a retirement savings perspective, this opportunity would allow me to be done saving within a few years...which is very tempting.
How will you ever come back to the US, without a Green Card?

Plus you will not be eligible for Citizenship if you turn in your Green Card.
michaelsieg
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Re: Any Bogleheads in Dubai?

Post by michaelsieg »

Good points - my wife and kids are US citizens - I don't think I am allowed to keep the green card if I live abroad, I think I have to turn it in. But you are right, the process of getting it took a while, I was hoping the second time around would be quicker. Not sure how the years with it would count for citizenship, if there is an interruption.
My employer tells me, they could get me an H1b visa quickly when we come back, and then we would have to re-apply....
Interestingly when we lived in Switzerland (where I am from), it took about 15 minutes at the local authority to get my wife's unrestricted resident permit....(and usually nothing ever happens quickly in Switzerland...)
kayanco
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Re: Any Bogleheads in Dubai?

Post by kayanco »

michaelsieg wrote:Good points - my wife and kids are US citizens - I don't think I am allowed to keep the green card if I live abroad, I think I have to turn it in. But you are right, the process of getting it took a while, I was hoping the second time around would be quicker. Not sure how the years with it would count for citizenship, if there is an interruption.
My employer tells me, they could get me an H1b visa quickly when we come back, and then we would have to re-apply....
Interestingly when we lived in Switzerland (where I am from), it took about 15 minutes at the local authority to get my wife's unrestricted resident permit....(and usually nothing ever happens quickly in Switzerland...)
Yes, I'm sure there are laws/rules around these things. I'd definitely suggest confirming everything with your employer/lawyers, to make sure everything is clear.
michaelsieg
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Re: Any Bogleheads in Dubai?

Post by michaelsieg »

Thanks Kayanco,
My wife did some reading about living there as a western women - I don't think she could accept many of the local rules anyways....so like anything else, finances are just one aspect of life's complex decisions....
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Mel Lindauer
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Re: Any Bogleheads in Dubai?

Post by Mel Lindauer »

I'm happy to announce our newest Local Chapter (the UAE Bogleheads) is now officially established. Thanks to Jen for stepping up and agreeing to be the Local Chapter Coordinator.

The group name is UAE Bogleheads.
The contact name is Jen
The email is UAEbogleheads@gmail.com

Good luck to all the UAE Bogleheads.
Best Regards - Mel | | Semper Fi
bhsince87
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Re: Any Bogleheads in Dubai?

Post by bhsince87 »

May I suggest a motto for the group?

"There are many roads to Dubai!" :happy
Time is what we want most, but what we use worst. William Penn
Kalergie
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Re: Any Bogleheads in Dubai?

Post by Kalergie »

@revivedblogger: Thanks for your answer. I guess it's best to use Saxobank (due to the lowest commissions in the region) and invest in Ireland domiciled funds. Least amount of headache. :happy
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Re: Any Bogleheads in Dubai?

Post by Valuethinker »

michaelsieg wrote:Good points - my wife and kids are US citizens - I don't think I am allowed to keep the green card if I live abroad, I think I have to turn it in. But you are right, the process of getting it took a while, I was hoping the second time around would be quicker. Not sure how the years with it would count for citizenship, if there is an interruption.
My employer tells me, they could get me an H1b visa quickly when we come back, and then we would have to re-apply....
Interestingly when we lived in Switzerland (where I am from), it took about 15 minutes at the local authority to get my wife's unrestricted resident permit....(and usually nothing ever happens quickly in Switzerland...)
I would try to find professsional advice on this. Losing the chance of being able to live and work in the USA could seriously screw up your life, especially if your spouse is a USian.
111
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Re: Any Bogleheads in Dubai?

Post by 111 »

Valuethinker wrote:
michaelsieg wrote:Good points - my wife and kids are US citizens - I don't think I am allowed to keep the green card if I live abroad, I think I have to turn it in. But you are right, the process of getting it took a while, I was hoping the second time around would be quicker. Not sure how the years with it would count for citizenship, if there is an interruption.
My employer tells me, they could get me an H1b visa quickly when we come back, and then we would have to re-apply....
Interestingly when we lived in Switzerland (where I am from), it took about 15 minutes at the local authority to get my wife's unrestricted resident permit....(and usually nothing ever happens quickly in Switzerland...)
I would try to find professsional advice on this. Losing the chance of being able to live and work in the USA could seriously screw up your life, especially if your spouse is a USian.
Non-professional anecdote: my brother-in-law went and worked in Dubai for about 2 years while he had his green card and did not have to give it up. But, he did return to the US like every 6 months and had property (not real estate) that he left in storage.

More authoritative site makes it sound like sort of a grey area: http://www.uscis.gov/green-card/after-g ... t-resident
Viracocha
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Re: Any Bogleheads in Dubai?

Post by Viracocha »

Hello everyone!

This is to let you know that we are organizing the first bogleheads meeting for the UAE chapter this weekend! This will be a good opportunity to share expat experiences and advice on implementing an effective index investing strategy.

We will meet in Dubai Marina on Saturday the 12 July 2014 for Iftar. If you are interested in joining, please PM me with your email address and I will add you to the mailing list.

Cheers,
Viracocha
carmo85
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Re: Any Bogleheads in Dubai?

Post by carmo85 »

Hello Vercocha,
Is the Dubai chapter of Bogleheads still alive? :?: :?:
Viracocha
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Re: Any Bogleheads in Dubai?

Post by Viracocha »

Yes it is!

You can find us here:
https://web.facebook.com/groups/466644330175575/

We are planning a few events in the coming months.
Viracocha
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Re: Any Bogleheads in Dubai?

Post by Viracocha »

And we are now organizing more events!

We have now lined up 4 events for the coming few months. The first one will be this week, and then it will be every 2 to 3 weeks.
- Dubai Meetup #2: "My experience with budgeting and saving in the UAE" by Ricardo on 24 of September 2016 at 4.30 PM in the Marina (more information will follow soon)
- Dubai Meetup #3: "How I track my money and forecast my wealth" by Sebastien on 8 of October 2016
- Dubai Meetup #4: "My experience with money and life" by Demos on 22 of October 2016
- Dubai Meetup #5: "My experience starting out on the journey of passive investing" by Hannah on 12 of November 2016

Please join the Facebook group for more details!

Sebastien
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