Expats want to flock to Dubai. Apart from the high quality of life, the foremost reason for such enthusiasm for Dubai is the fact that Dubai is a tax-free nation. There is no income tax on income generated in Dubai. Also, there is no sales tax on the majority of goods and services.

For those wishing to live in Dubai, a salary resulting in a monthly pay of AED 10,000 to AED 13,000 is relatively comfortable.

HSBC Expat Explorer survey showed that the average salary for expats in the city is $138,177 per annum, with 72 percent of expats saying that they have more disposable income than they did back home. Mumbai took the top spot for expat salaries – the average expat there earning $217,165.

The table can help you get an idea of how much money you’ll need monthly:

According to the Mercer Cost of Living, Dubai is an expensive city. It ranked as the 23rd most expensive out of 209 destinations. However, it is about 25% less expensive than New York City – and about 4% less expensive than nearby Abu Dhabi. As such, depending on where you live now, Dubai might look like a bargain.

The Emirates don’t levy any personal tax or capital tax. It’s true for both UAE citizens and expats. As a result, there is no special taxation regime for expat workers in the UAE as they are treated the same way as citizens when it comes to personal or capital income tax.

In the UAE, a Western expat makes 12.6 per cent more than an Arab expat and 40.5 per cent more than an Asian expat, while an Arab expat gets paid 24.7 per cent more than an Asian expat. Qatar is also the country where a Western and Arab expat have similar take-home salaries.

While grandiose visions of tax-free wealth lure expats to the United Arab Emirates in droves, it is worth remembering that the cost of living in Dubai is rather high.

If you are used to living in a major European or North American city, then Dubai probably won’t have too many nasty surprises in store for you. In fact, if you are adventurous enough to try a few “off the beaten path” eating experiences, the surprises are likely to be of the pleasant kind, both culinary and financial.

In desirable locations costs are very different. A villa with 4 or 5 bedrooms could fetch between AED 250,000 and AED 350,000 in the Arabian Ranches, while the Palm’s villa prices can easily exceed AED 1,000,000: that’s per year, to rent. For more information see our House Hunting in Dubai page.

There are no taxes on salaries or wages in Dubai, and sales tax is, for the most part, minimal. Despite the favourable tax climate, living expenses can add up, and many expats find themselves spending money on luxuries that they would not normally have splurged on back home.