Why dual citizenship provides substantial benefits

The country’s favourable tax structures, banking centre status and ease of doing business make it an attractive destination for foreigners

Jan 31, 2024

In a globalised world, dual citizenship is no longer a rarity but a choice many people make to broaden their horizons.

Dual citizenship refers to a legal status where a person is simultaneously recognised as a citizen of two countries, which can be acquired by birth, descent, marriage, naturalisation or by investment, depending on the laws and regulations of the countries involved.

This condition permits individuals to benefit from the entitlements and advantages provided by both nations, including the ability to live, work, study and gain access to social benefits in both nations.

Dual citizens or multi-locals are becoming more common thanks to an increasing interest in having dual and several citizenships, and greater tolerance by governments worldwide.

In 1960, just one third of countries allowed dual citizenship, compared with 75 per cent in 2019.

As awareness around global citizenship grows, so is the world’s acceptance and governments’ support by clear, legal pathways.

The UAE, a pioneering nation in dual citizenship, distinguishes itself among Middle Eastern countries as an appealing location for international residents.

While dual citizenship was previously banned, the UAE permitted this by amending the Nationality Law in 2021, allowing foreign investors, professionals, special talents and their families to obtain citizenship under certain conditions and only if they are nominated by the government or royal court officials.

It is also worth noting that Emiratis themselves are not permitted to hold dual citizenship.

The UAE government emphasised that this legislative adjustment aims to attract and retain people possessing specialised skills, including scientists, doctors, engineers and creative talents such as artists and authors, along with their families.

Tax transparency

High-net-worth individuals (HNWIs) favor territories like the UAE for adherence to global norms and advantageous tax arrangements.

The UAE’s tax system stands out for its lack of income and inheritance taxes, a low corporate tax rate of 9 per cent, double tax treaties with 139 countries for tax relief and the ability for high-revenue corporations to offset foreign taxes against the UAE’s corporate tax, preventing double taxation.

Banking centre

Featuring outstanding infrastructure and a wide range of international banking institutions providing business-oriented services, the UAE establishes itself as a leading worldwide financial hub for business ventures and diverse financial products.

Moreover, as a leader in cryptocurrency and blockchain technology, the city has a well-regulated decentralised finance ecosystem, solidifying this reputation further.

Succession planning for HNWIs

Estate planning is essential for HNWIs, although a recent study by Swiss financial institution Lombard Odier indicates that merely 24 percent of Middle Eastern’s ultra-wealthy have comprehensive estate plans for the next generation.

Succession planning in the UAE has significant advantages: The absence of inheritance tax mitigates tax burdens for heirs while financial free zones with robust legal systems ensure enhanced privacy and asset protection, advanced trust and foundation laws, and the option of registering wills in the Dubai International Finance Centre, enabling inclusion of global assets.

Social integration

Preserving one’s cultural identity while integrating into a new society is a universal challenge for dual citizens.

Cultural ties, national pride and personal connections to each nation can create a complex interplay.

The UAE’s diverse cultural mosaic offers an ease in striking the right balance to understand both nations’ cultural, historical and social nuances.

How to tackle legal issues

Legal challenges may arise for dual nationals when legislation from two countries intersects.

Dual citizens must proactively engage with legal professionals well-versed in international law to navigate potential minefields and find resolutions that align with the laws of both countries.

As the UAE adopts dual citizenship, individuals who have undertaken this path function as sources of valuable guidance.

Their experiences highlight the importance of actively managing loyalty, legal considerations, economic strategies and cultural connections.

As the nation evolves, the experiences of these dual citizens provide a road map for others to follow, demonstrating that it is possible to strike a harmonious balance between two countries.

Veronica Cotdemiey is chief executive of Civigrant Interest

Source - The National