Another month, and another… infographic, it seems.
This time around, it’s on everyone’s favorite topic: tax evasion.
By “tax evasion,” of course, I mean “working in the finance industry in the Middle East.”
We’ve done quite a few interviews with readers who work in Middle Eastern countries and who have recruited successfully in the region, so this combines all their stories with extra research on salaries, deals, and economic activity in the region.
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The Textual Version…
I’ve spent so much time staring at this thing and submitting edits to our “presentation department” that I can already anticipate your questions in advance, so let’s step through the categories one by one:
The Salaries… What?
“Wait, what? Since when do Associates make between $150K and $250K for base salaries? Are you sure those numbers are right?”
A few quick points on these numbers and the rest of the salary figures here:
- These figures are not based on hearsay on message boards or gossip sites, but a formal survey done by a professional recruiting group – in fact, you can click here to read it for yourself.
- Yes, I agree that some of the numbers are probably off; for the Associate figures specifically, my guess is that they may be including partial bonuses or including housing allowance figures that are too high.
- The trend lately has been to offer higher base salaries and lower bonuses (and more deferred and/or stock-based compensation) in response to regulation, so the figures here may also reflect that.
- If you look at the report, the figures for the VP and Associate pay are nearly the same – so they may have somehow lumped them together. VPs do have higher base pay, which could explain this.
- Finally, this report only lists salaries for the UAE. In other countries, salaries would almost certainly be lower.
Let’s take a look at a few of the data points from the report:
Nothing in this first chart seems particularly outlandish – maybe the junior private banker pay is too high, though it’s unclear what they’re including for the housing allowance figures here.
The Associate vs. VP pay here stands out as being “off” in some way, so I would assume that the upper end of the range is more for VPs and the lower end (and lower) is more for Associate-level compensation.
Also, I have no idea how you could even have a “5th year Analyst” so we just excluded that part completely.
An Associate who has been working for 9 years is also a little unbelievable, but if you factor in 3 years of work at the Analyst level, plus 3-4 years at the Associate level, plus possible work experience before that, it’s possible.
The Bottom Line
So no, I don’t completely believe all these numbers, and it would have been more helpful to see the breakout of base salary vs. housing allowance as well.
But you have to go with the data available, and we wanted to give some estimates of salaries in the region rather than just saying, “No idea! It takes too much work to get the information anyway.”
Taxes and Housing Allowance?
Let’s start with the easy part: yes, taxes really are that low in most of the Middle East. Go ahead and look it up on Wikipedia or government sources if you’re skeptical.
Note that some of these rates are in the process of changing, or will be changing next year (e.g. the rates are changing slightly in both Egypt and the UK) – so before you leave a comment wondering why the rate is 50% or 25% rather than 45% or 20%, that’s the explanation.
It’s a little misleading here to show only the top tax rates in Western countries, because most of your income as a junior in banking / PE / hedge funds will not be taxed at that rate. But you still end up paying a huge amount in taxes in these countries.
The housing allowance is trickier to explain, because there’s less consistent information on that one. From what previous interviewees have stated, it seems common in some regions (Dubai), but possibly not as common in other places.
Still, you can’t go wrong with any type of free, un-taxed allowance – wouldn’t it be nice to get that in New York or London?
Is Pakistan really part of the “Middle East?”
I would consider it more a part of South Asia, but we left it in here simply because you could argue that it’s part of the “Greater Middle East” – and since some investment firms and companies in the “real” Middle East do invest there.
If this upsets you, just ignore this part and all the stats from there – most of the infographic is based on the more “official” Middle Eastern countries, anyway.
Cost of Living
Showing Abu Dhabi and Dubai for the two “representative cities” here isn’t exactly the best way to show that the cost of living is lower in the region, because cities such as Riyadh are far cheaper overall.
Still, it is true that the cost of living in those two places has fallen over the past few years. It’s still expensive to live there, but you still save something over NY or London, especially when the housing allowance is factored in.
This doesn’t show every possible country in the Middle East that has a “finance industry” – for example, there are some investment banks in countries such as Jordan, though the industry is still small and very new.
And yes, even Iran has a few banks – but it’s not exactly realistic for most Westerners to work there, so it wasn’t included.
Oh, and if you work in one of these countries that we haven’t covered yet (e.g. Israel or Egypt), we’re always looking to add additional interviews to the site so email us right away to set up an interview.
Deals and Work
Most of these sections are based on previous interviews – the privatization and regulatory factors are more relevant in Saudi Arabia.
Smaller deal teams, more “random” work, and less focus on the nitty-gritty technical details all apply throughout the region though.
The in-person networking trips sponsored by universities that previous interviewees have described are probably the best way to gain a foothold in the region and position yourself for interviews.
Other than that, internal transfers are the next most viable option, especially in countries like Saudi Arabia that are not exactly open to random foreigners showing up and expressing interest in working there.
The situation with headhunters may be starting to change, but as with developed markets, they are not terribly useful unless you fit the exact profile that they’re looking for.
To go into more detail on the “good story” point in the infographic: the most common mistake here is to come up with a vague “story” that doesn’t credibly explain your interest in the region.
If you talk about reading the news or following economic and financial activity in the region, that’s not a particularly strong reason for wanting to work there.
- You’ve lived there before, for a study abroad program, for an internship, or something else where you spent significant time in the region.
- You’ve studied the language(s) for years or have majored in something that’s highly relevant to the region.
- Your family is from the region, or you still have family living there.
- You worked on a deal or with a client that had ties to the Middle East, and you gained firsthand exposure from that.
The less specific your reason, the more they’re going to think: “Well, he/she just wants to evade taxes and work easier hours.”
And that’s the #1 thing you want to avoid when recruiting in the Middle East.
For Additional Reading / Sources for This Infographic:
Here are the previous interviews we’ve done on the “Greater Middle East”:
- Investment Banking – Dubai
- Investment Banking Recruiting in Dubai
- Investment Banking – Saudi Arabia
- Investment Banking – Pakistan
And here are the links for the external research used in this infographic:
- UAE Salary Guide
- NY Times Article on Banker in the Gulf
- Is the Middle East Making a Comeback?
- News of $500M Dubai Bond
- Cost of Living in Abu Dhabi and Dubai
- Saudi Arabian Group’s $1B Investment
- KPMG – Income Tax Rate Survey