Manik Verma July 25, 2025July 25, 2025 From April 2025, the United Kingdom will eliminate its long-standing non-domiciled tax regime. The new rules will introduce a residence-based system, taxing global income and gains after a four-year transition period. For many international shipowners, this means the end of a structure that offered flexibility, tax efficiency, and strategic advantages for decades. The reform goes further than expected. It removes trust protections, limits reliefs such as Overseas Workday Relief, and opens the door to inheritance tax on worldwide assets after ten years of UK residence. For owners with complex structures or cross-border operations, the compliance burden will rise sharply. Many are already reconsidering their presence in the UK. One of the most notable recent moves was by billionaire shipowner John Fredriksen, who closed his UK operations and relocated to Dubai following the tax announcements. His exit has drawn attention across the maritime world and signals a broader shift already underway. Attention is shifting to the United Arab Emirates. The tax burden and potentially lower cost of living in the UAE is more attractive option for many individuals/shipowners. Why the UAE is becoming the obvious choice The UAE offers a combination of legal clarity, fiscal neutrality, and maritime infrastructure that is increasingly hard to ignore. For shipowners, the appeal is clear: Corporate tax is zero percent for international shipping income earned through qualifying Free Zone entities There is no personal income tax, no capital gains tax, and no inheritance tax VAT is zero-rated or exempt for most international maritime activities Foreign ownership is permitted at 100 percent within Free Zones Company formation and opening bank account is fast and straightforward, often completed within a few days Local availability of top-tier ship management, legal, crewing, and finance services Access to respected arbitration venues, including EMAC, DIFC-LCIA, and ADGM and English is widely spoken A strategic location with direct links to Europe, Asia, and Africa and very strong in operations and logistics where Middle East plays a crucial role as a transshipment hub Lower cost of living and crime rates compared to the UK The banking sector is robust and internationally integrated. Trade finance, ship leasing, and structured marine lending are available through both local and international institutions. For key personnel, the UAE offers a high standard of living, stable regulation, and long-term visas (for example UAE Golden Visa and Freelance permits) for investors and business owners. A pivotal shift for the maritime sector The UK’s reforms are not just technical tax adjustments. They represent a wider repositioning of the jurisdiction in the eyes of globally mobile industries. Shipping is one of them. The UAE is not just an alternative. It is increasingly the jurisdiction of choice for owners seeking legal predictability, operational flexibility, and tax efficiency in one place. The UAE is actively promoting the adoption of digital technologies, including AI and blockchain, to drive operational efficiency and sustainability in the maritime sector. We are speaking to more and more shipowners who are exploring what a UAE structure could look like for their group. We assist in structuring the financing, ensuring compliance with UAE law and protecting the shipowner’s interests. If you are considering the same, our team is available for a confidential discussion to help you assess the legal and fiscal landscape here.
