Identifier
Created
Classification
Origin
06ABUDHABI4290
2006-11-15 12:01:00
UNCLASSIFIED
Embassy Abu Dhabi
Cable title:
US BUSINESS IN UAE HURT BY HIGH HOUSING COST AND U.S. TAX
how-toVZCZCXRO9444 RR RUEHDE RUEHDIR DE RUEHAD #4290 3191201 ZNR UUUUU ZZH R 151201Z NOV 06 FM AMEMBASSY ABU DHABI TO RUEHC/SECSTATE WASHDC 7686 INFO RUEHDE/AMCONSUL DUBAI 6631 RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE RUEATRS/DEPT OF TREASURY WASHINGTON DC RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS ABU DHABI 004290
SIPDIS
SIPDIS
DEPT FOR NEA/ARP, EB/TPP/BTA
TREASURY FOR DAS SAEED AND OFFICE OF TAX POLICY
USDOC FOR 1000/ITA/OFFIE OF THE UNDERSECRETARY/FLAVIN
USDOC FOR 3130/ITA/US&FCS/DAS FOR OIO/DHARRIS
USDOC FOR 4000/ITA/MAC/OFFICE OF THE ASSITANT SECRETARY/DBOHIGIAN
E.O. 12958: N/A
TAGS: EFIN ETRD AE
SUBJECT: US BUSINESS IN UAE HURT BY HIGH HOUSING COST AND U.S. TAX
LAW CHANGES
UNCLAS ABU DHABI 004290
SIPDIS
SIPDIS
DEPT FOR NEA/ARP, EB/TPP/BTA
TREASURY FOR DAS SAEED AND OFFICE OF TAX POLICY
USDOC FOR 1000/ITA/OFFIE OF THE UNDERSECRETARY/FLAVIN
USDOC FOR 3130/ITA/US&FCS/DAS FOR OIO/DHARRIS
USDOC FOR 4000/ITA/MAC/OFFICE OF THE ASSITANT SECRETARY/DBOHIGIAN
E.O. 12958: N/A
TAGS: EFIN ETRD AE
SUBJECT: US BUSINESS IN UAE HURT BY HIGH HOUSING COST AND U.S. TAX
LAW CHANGES
1. U.S. businesses in Abu Dhabi and Dubai have approached both the
Embassy and Consulate General to express concern about the negative
impact of recent changes in the U.S. tax code on the amount of
housing assistance that can be excluded from taxable income. Under
the revised regulations, U.S. residents of certain high cost cities
are able to exclude more of their housing assistance from taxes,
however the Department of the Treasury did not include either Abu
Dhabi or Dubai in the list of high cost cities. The Department of
Treasury drew its list from the Department of State's report on
housing allowances for employees ranked at above the FS 2/GS-14
level living in the UAE with families. Because all USG personnel in
the UAE are in government furnished quarters, neither Abu Dhabi nor
Dubai are included in this report. Except for Kuwait and Bahrain,
none of the countries in the GCC are included.
2. The UAE is a major export market for U.S. goods (the largest in
the Middle East and North Africa in the first half of 2006),with
almost six billion dollars in U.S. exports in the first half of
2006. There are approximately 700 U.S. companies physically present
in the UAE and over 20,000 Americans resident here. According to
U.S. businesses, the high cost of housing in the UAE is making it
increasingly difficult to staff operations here with U.S. citizens.
The changes in the tax law and forecasted sharp increases in tax
liability for American citizens living in the UAE will exacerbate
the problem. Anecdotally, we have already heard of Americans either
leaving the UAE or sending their families home, due to the high and
increasing cost of housing. Housing costs in both Abu Dhabi and
Dubai have increased substantially in the last several years. In
September, Standard Chartered Bank estimated that rents in Dubai
increased by 22.5% in 2005 and about 16% in 2006. Standard
Chartered's estimate of rent increases in Abu Dhabi was 36% for
2006.
3. Because the current methodology does not capture the cost of
housing for expatriates in the UAE and because we are concerned
about the impact on U.S. residents here and on U.S. business
competitiveness, we have prepared the following data for Department
and Treasury's consideration in revising the exclusions to more
accurately reflect costs in the UAE. Embassy selected all leased
housing for USG officials at grade FS-2 (or equivalent) and above,
living with families in Dubai and Abu Dhabi. (Note: These figures
exclude the Ambassador' residence. End Note.)
Abu Dhabi - 2006
--------------
Number of Houses - 28 villas and 1 apartment
High Price - $81,684
Low Price - $43,565
Mean - $53,874
Standard Deviation - $ 7,143
Dubai
--------------
Number of Houses - 10 villas
High Price - $68,064
Low Price - $40,839
Mean - $51,776
Standard Deviation - $ 7,780
Sison
SIPDIS
SIPDIS
DEPT FOR NEA/ARP, EB/TPP/BTA
TREASURY FOR DAS SAEED AND OFFICE OF TAX POLICY
USDOC FOR 1000/ITA/OFFIE OF THE UNDERSECRETARY/FLAVIN
USDOC FOR 3130/ITA/US&FCS/DAS FOR OIO/DHARRIS
USDOC FOR 4000/ITA/MAC/OFFICE OF THE ASSITANT SECRETARY/DBOHIGIAN
E.O. 12958: N/A
TAGS: EFIN ETRD AE
SUBJECT: US BUSINESS IN UAE HURT BY HIGH HOUSING COST AND U.S. TAX
LAW CHANGES
1. U.S. businesses in Abu Dhabi and Dubai have approached both the
Embassy and Consulate General to express concern about the negative
impact of recent changes in the U.S. tax code on the amount of
housing assistance that can be excluded from taxable income. Under
the revised regulations, U.S. residents of certain high cost cities
are able to exclude more of their housing assistance from taxes,
however the Department of the Treasury did not include either Abu
Dhabi or Dubai in the list of high cost cities. The Department of
Treasury drew its list from the Department of State's report on
housing allowances for employees ranked at above the FS 2/GS-14
level living in the UAE with families. Because all USG personnel in
the UAE are in government furnished quarters, neither Abu Dhabi nor
Dubai are included in this report. Except for Kuwait and Bahrain,
none of the countries in the GCC are included.
2. The UAE is a major export market for U.S. goods (the largest in
the Middle East and North Africa in the first half of 2006),with
almost six billion dollars in U.S. exports in the first half of
2006. There are approximately 700 U.S. companies physically present
in the UAE and over 20,000 Americans resident here. According to
U.S. businesses, the high cost of housing in the UAE is making it
increasingly difficult to staff operations here with U.S. citizens.
The changes in the tax law and forecasted sharp increases in tax
liability for American citizens living in the UAE will exacerbate
the problem. Anecdotally, we have already heard of Americans either
leaving the UAE or sending their families home, due to the high and
increasing cost of housing. Housing costs in both Abu Dhabi and
Dubai have increased substantially in the last several years. In
September, Standard Chartered Bank estimated that rents in Dubai
increased by 22.5% in 2005 and about 16% in 2006. Standard
Chartered's estimate of rent increases in Abu Dhabi was 36% for
2006.
3. Because the current methodology does not capture the cost of
housing for expatriates in the UAE and because we are concerned
about the impact on U.S. residents here and on U.S. business
competitiveness, we have prepared the following data for Department
and Treasury's consideration in revising the exclusions to more
accurately reflect costs in the UAE. Embassy selected all leased
housing for USG officials at grade FS-2 (or equivalent) and above,
living with families in Dubai and Abu Dhabi. (Note: These figures
exclude the Ambassador' residence. End Note.)
Abu Dhabi - 2006
--------------
Number of Houses - 28 villas and 1 apartment
High Price - $81,684
Low Price - $43,565
Mean - $53,874
Standard Deviation - $ 7,143
Dubai
--------------
Number of Houses - 10 villas
High Price - $68,064
Low Price - $40,839
Mean - $51,776
Standard Deviation - $ 7,780
Sison