UAE finds its place secure in the list of top countries when it comes to expat pay packages.
According to data revealed by ECA International, UAE is ranked among the top countries that offer far more generous salaries than other expat destinations around the world.
While total salary packages are higher in certain other destinations, with zero income tax in place, the takeaway component is one of the highest in the UAE.
Employers in the UAE are also more generous than their counterparts in the GCC and the Mena region at large.
According to ECA’s latest Salary Trends report, Middle East salaries witnessed an average increase of 4.6 per cent in 2014, rising less quickly than the global average (5.6 per cent).
ECA is a consulting firm that provides data and software solutions to assist companies in the management of international assignees around the world.
Its forecasts suggest salaries will rise at a similar rate this year.
Employees in Saudi Arabia, the UAE and Kuwait received the largest salary increases in the region in 2014, a trend that ECA says is set to continue.
After inflation, wages in the region increased 2.1 per cent on average last year. This figure is expected to fall slightly in 2015 to 1.9 per cent.
To compare the pay scales of employees in different countries across the world, ECA compares the cost to companies of a typical total expatriate pay package for middle managers.
When considering expatriate package costs, the company breaks down salaries into three main elements: the cash salary, benefits (such as accommodation, international schools, utilities or cars), and tax.
The UK has the highest expatriate packages among top financial hub countries. It is around $430,000 per year on average, making them the best paid.
However, the tax that employees pay in the UK is also highest in the list of countries tracked by ECA, eating into the total pay package for people working here.
Japan comes second on the list followed by France, Australia and Brazil in the top 5 but all these countries levy taxes on an individual’s salary.
If only the salary and benefits components is taken into account, pay scales are better in the UAE than countries like Australia, Sweden, China and the same as in the United States of America.
For most expats in the UAE, a tax-free income makes a perfect case for living and working in the country.
Expatriates working here have zero taxation on their income, which translates into substantial savings for an average individual, a previous Economic Intelligence Unit report highlighted.
For instance, an expatriate earning $100,000 in the UAE realises the full amount.
Elsewhere, the same salary would result in a take-home pay of just $66,000 (in the US), $70,000 (in the UK), $72,000 (in India) and $73,000 (in Australia).
This zero-income-tax environment has proved a major draw for expatriates. The amount we may have had to pay as income tax elsewhere goes straight into our own pockets here, meaning a big chunk of our salary has the potential to become savings.
Other than the UAE, two other GCC countries – Saudi Arabia and Qatar are included in the top paymasters’ list.