Dubai's new pay advantage

With tax clampdowns and hard-nosed regulatory proposals in Western markets, financial services salaries in the Middle East now look like a tempting carrot to sway talent to the region. And the regulator has promised maintain a light-touched approach to pay.

The Dubai Financial Services Authority (DFSA) said it will not be regulating salaries or variable compensation for the "foreseeable future".

"I've never been in favour of making that the critical element of tackling the financial crisis," DFSA chief executive Paul Koster told Emirates Business yesterday.

This is a timely announcement, as it coincided with the UK budget, when chancellor Alistair Darling revealed harsh new income tax measures for people earning over 150k ($218k, AED802k).

The new rate is 50% for earnings over 150k, which works out as 63% when National Insurance is added to the mix.

Couple this with the controversial plans by the G20 to curb risk-taking through tighter regulation and salary and bonus caps at banks and hedge fund managers, and the Gulf's tax-free compensation suddenly looks a lot more alluring.

There's also the fact that Gulf salaries have held up better than anywhere else in the world. Total compensation fell by 10% in the region in 2008, according to the latest Napier Scott salary survey, which compares with a 62% slump in London.