Many ex-pat residents in the UAE take the loan for personal use or business because they all need money to solve the financial difficulties and pay it back in a small portion, particularly every month. Today in this post I will make you clear if you have this question about what will happen bank loan in UAE after termination of the employment contract.

Well, you know what? Loaning to a foreign worker in the UAE is a difficult decision taken by the UAE bank because it could fall into the risk at any time.

There is another problem if banks in the UAE don’t lend to foreign nationals who they loan because 90 percent of the UAE population is foreign nationals and how much they lend if they are only grand to the UAE nationals their population is just 10 percent.

When the high amount of credit goes to the foreign national UAE government’s financial policy against defaulters, it is also very tough. Financial issues with banks in the UAE consider that crime and the country’s criminal law will involve not civil law like other countries in the world.

What kinds of loans, UAE banks release to foreigners?

Banks of the UAE offer a variety of loan products to the foreign nations who have a valid resident visa and have regular income to repay the credit.

1. Personal loan
2. Housing loan
3. business loan
4. Auto loan
5. Student loan

If you lose your job and your business does not make any profit, any type of loan you may liable can be the default.

Now let’s talk about this scenario whether you lost your job or your small business has bank-craft. the bank recovery team will not consider and compromise on your situation they will constantly follow to settle your liability.

Although you have lost the job due to the termination contract from the employers or yourself the bank will not take the aggressive action for recovery if you are able to pay the due installment in the time.

What action bank can take when you lost the job?

• Bank loan officers will request you to settle the entire loan unless you have got the opportunity in the new company
• Bank can request the immigration of the UAE to issue the travel ban against you out of the UAE.
• They can file the criminal case against you after bouncing the security Cheque that you might have signed a blank cheque on the day the loan was issued.

Bank loan in UAE after termination

The UAE financial regulation and the law also do not give the concession on the person who has lost the job. In any situation you may lose the job or not, you are responsible to settle the bank loan that you have owed.

What to do if you lost the job and can not settle the loan in the current situation?

• If you’ve managed to escape your country before the bank knows your condition, that’s another matter, but;
• When you’ve lost your job, don’t try to go back to your country if the bank already knows your situation and has followed you for settlement because you can be arrested at the airport and the case will take another model.
• Let them know your process if you have got the job in a new company or looking for that.
• Ask them to discount the interest if you think you can not pay that.
• Request them to differ the installment until you get some money from a previous employer as an end services compensation.
• Discuss with the loan recovery team and explain to them your plan to settle the loan.
• If you have done loan insurance seek assistance with the expert and apply for the insurance.
• If you’re going back to your country, also let your bank staff know. You don’t have a due installment, but you’re going to pay the monthly installment from your country they can allow you.
• Always think about solving the problem with the bank, do not engage in an activity that contributes to the escalation of the situation.

Wrapping up: UAE banks do not care whether you lost the job or have any issued with the current employer and have not gone for Duty. Always think about how to settle bank loan in UAE after termination of the contract with the employer.

The United Arab Emirates is a federation of 7 Emirates, each of which has the autonomous power of the local government to impose income taxes or any other taxes. There is no federal income tax in UAE to the public or the businesses on their earnings.

The UAE lost its reputation as a tax-free country when it first introduced VAT (value-added taxes) in 2018. Although the government does not directly tax workers ‘ wages and profits of the organization, it has taxed the individual’s income in a secondary way.

There are two ways the governments dig into the individuals earning and takes a slice as the name of the income taxes.

1. Primary taxes
   • Primary taxes means that the person who is subject to the taxes pays directly from the income which is possible by pressing the tax office or using the digital payment system. for example; taxes over the profit of the organization and tax on the wages or salary, etc.
2. secondary taxes
   • The person subject to the tax does not pay directly, but other parties pay on behalf of the first person or the person liable for the tax. for example; VAT (value-added taxes).

Some countries, particularly developed nations’ residents, and organizations pay both taxes and save less, even though they earn more than other countries in the world.

Let’s talk about income tax in the UAE. Before January 2018, whether you work or business, whether you earn high or low, you didn’t have to pay a single cent of your money to the government. How much you would make and go back to your own country with your savings.

It was the main reason many expatriates, especially from the developed country, wanted to come to Dubai or UAE for work, still, the trends have not changed.

Is the UAE income tax-free country?

No, even if you do not pay taxes on your monthly salary or company income, you do pay taxes when you buy products from daily necessities to equipment that is used to operate your business.

In addition, you will pay 5% of government taxes in excess of the usual price of the products. We spend our money on the purchase of goods and services, but any item we buy or service we utilize has to pay 5% VAT.

Either way, some of your money goes to the government. UAE government tax doesn’t directly affect your income, but your spending on goods and services is going to rise, which is going to eat your revenue and long term saving.

What is the provision of vat in UAE?

• The business needs to register at tax if their taxable supplies and import exceeded the mandatory threshold. AED 37500.
• The organization need to register as taxes payable organization voluntarily if its supplies and importers fall less than the mandatory threshold but higher than the voluntary threshold of AED 175,000.
• Any organization’s annual business turnover is less than the voluntary threshold. It should registration within the 20 days by submitting the de-registration application.

Non-VAT applicable goods and services 

• Exports the goods and services to countries outside the GCC;
• International transportation, and related supplies;
• Transportation through the sea or sky.
• Investment on precious metals (e.g. gold, silver, of 99% purity);
• Newly built residential buildings, which are first supplied within 3 years of their construction;
• the provision of certain education services and the supply of the goods and services concerned that
• procurement of other health care facilities and supply of the products and services involved in it.

VAT in UAE 2020-exemption goods and services 

• The provision of other financial services
• Residential properties;
• Bare land; and Local passenger transport

Conclusion: Individuals or organizations will pay income tax in uae through the secondary way. Although it does not seem that you are paying taxes on your income, you will pay it indirectly through the value-added taxes on the consumption of goods and services.

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