Job Discussion Forums

robbievienna · Joined: 22 Apr 2009 Posts: 15

Hi All,

I'm teaching with a US-based company here in the UAE. Having been here for a few weeks, I found out that a) they expect me to pay US taxes, and b) that they refuse to comply with local UAE labor laws (leave, bonus, etc.). However, based on my reading of the labour law ( http://www.zu.ac.ae/library/html/UAEInfo/documents/UAELabourLaw.pdf ), they are not exempt. The salary is about average, but having taxes deducted and not getting my benefits puts me in the red. Does anyone have experience with this? Any advice?

Thanks,

helenl · Joined: 04 Jan 2006 Posts: 1202

What did your contract say when you signed it?

robbievienna · Joined: 22 Apr 2009 Posts: 15

The US contract didn't mention it. It stated simply that I would be living/working in the UAE. We are busy processing all my local paperwork through the Ministry of Labour. Once that's accomplished, I will have more of a sound case. The Ministry states that anyone who works here is eligible for the benefits. Companies in the US tend to have the problem that they forget that there are other jurisdictions, other governments. Even within the US, when a company with a home office in one state employs someone in a second state, the company becomes bound by the labor regulations set by the second state (maternity leave, etc.). If they're not willing to abide by local labor laws, they don't operate there.

Never Ceased To Be Amazed · Posted: Mon Oct 19, 2009 2:03 pm Post subject:

I've had experience with U.S. company employees working overseas, namely Raytheon who had ancillary taxes such as Social Security deducted from their income, but none, save TDY military personnel who've had to pay income taxes.

Two possible scenarios you may fall under might make it possible that you could be liable for taxes:

1.) Your contract states that you are based in the U.S., or

2.) Your company plans on NOT keeping you outside the U.S. for more than 330 days a tax year.

These scenarios would defeat both the "Bona fide resident " (1) or the "Physical Presence" tests (2) that the I.R.S. requires for the "Foreign-earned exemption".

Hope this helps.

NCTBA

veiledsentiments · Joined: 20 Feb 2003 Posts: 17644 Location: USA

Is this in education?

I don't believe that you would have to pay taxes even if your contract stated that you were "based" in the US (assuming that you meet the IRS rules for income exemption stated by NCTBA). The only exception is if you are working for the embassy and employed by the US government. Your work visa in the UAE and exit/entry stamps would prove your case.

Having Social Security deducted is a benefit (IMHO), but if they deduct income taxes, you would be able to get them refunded with the filing of your 1040. (you could look at it as a forced savings plan... Laughing

)

VS

Never Ceased To Be Amazed · Posted: Mon Oct 19, 2009 6:02 pm Post subject:

johnslat · Posted: Mon Oct 19, 2009 6:06 pm Post subject:

Dear NCTBA,

Ah, but according to the SS, you CAN pay into SS in the Gulf IF you work for the US government OR a US company there.

Regards,
John

Never Ceased To Be Amazed · Posted: Mon Oct 19, 2009 6:16 pm Post subject:

You're right, John. I wasn't contemplating that scenario. Perhaps I should apply at Halliburton? Laughing

NCTBA

johnslat · Posted: Mon Oct 19, 2009 6:22 pm Post subject:

Dear NCTBA,

Well, I hear they're looking for a few good men (good, however not in the sense of morally excellent; virtuous; righteous; pious.)

More like what's conveyed by the term "a good lawyer" or "a good politician."

Regards,
John

Never Ceased To Be Amazed · Posted: Mon Oct 19, 2009 6:39 pm Post subject:

Or, a thousand lawyers at the bottom of the ocean is a "good" start... Very Happy

NCTBA

s2000000 · Joined: 27 Dec 2008 Posts: 26

I don't suppose your present ( education?) job with the US based company you mention, involves a daily drive/commute of 2 hours or so, from Dubai( your apartment ) to Al Ain( where the schools are ), and return ?

15yearsinQ8 · Joined: 17 Oct 2006 Posts: 462 Location: kuwait

regardless of where you work, if you work for an american based comapny (not a shady defense contractor with US offices but chartered inthe cayman islands - there is a big one here in kuwait) you MUST pay FICA which is your Social Security deduction - call it a tax if you will
federal tax withholdings are checked by you - to withhold, to pay, how much.... on a w-2 form? when you are employed
when i worked for the us based university, teaching college to us service personnel in the gulf, i checked 'pay nothing' but fica was deducted
the down side to that was (i was told) because i paid no federal tax from my income i was not intitled to a tax refund - you have to pay something in to get a refund.....
re social security, your contribution is peanuts. and you can always pump up your ss account by contributing off line (many teachers who work overseas do this) - remember you have to have 10 years or 40 quarters of ss contribution to get anything upon retirement

also in saudi · Joined: 26 Feb 2006 Posts: 137

The US Foreign Income Exclusion applies only up to $87,000. Any foreign income over that amount is subject to federal income tax.

adorabilly · Joined: 20 May 2006 Posts: 430 Location: Ras Al Khaimah

It also depends on where the employer is located.

We taught in china for two years, but we were paid by a university in Kansas, so we were taxed.

We worked in tokyo for a year, but the school we were paid by is in Montana... again we were taxed and had federal witholdings taken out of our salaries.

If the company is based in the US, then the US labor laws may apply (if it has been negotiated between the UAE and the US companies).

You should check and see EXACTLY what your contract says, and if you have questions check with the HR person here, and then check with the Ministry of the UAE government that is applicable.

veiledsentiments · Joined: 20 Feb 2003 Posts: 17644 Location: USA