financial and sexual scandals behind the tourist poster based on luxury real estate

#DubaïUncovered (unmasked) and #PortaPotty Gate are the names of the two scandals that hit the emirate of Dubai in a few days. They revealed the dark side, rather muddy, of this bling bling geographical confetti which relies on its luxury real estate and its financial opacity to attract tourists but also wealthy visitors in search of tax optimization, including Russian oligarchs.

146 billion dollars or a third of the real estate market in the Kingdom of Dubai is held by foreigners. This is the amount established by the collaborative investigation “Dubai Uncovered” (“Dubai unmasked”) which brings together twenty international media including Le Monde, under the aegis of the Norwegian financial media E24. She was able to access for the first time a database that lists the 274,000 owners of 800,000 properties located in Dubai. By way of comparison, this real estate heritage held by foreigners is higher than its equivalent in London or Paris.

The attractiveness of Dubai is based on luxurious and spectacular real estate constructions such as the artificial island in the shape of palm trees, Palm Jumeirah, which houses the largest water park in the Middle East alongside hotels and luxury residences. One of the high-ranking Russian officials, Alexandre Borodaï, targeted by international sanctions, has for example a very large apartment in a residence which has swimming pools, restaurants, a heliport and an active security service twenty- four hours a day.

Fiscal paradise

Certain nationalities are highly represented in the list of property owners consulted by the investigators. Indian nationals concentrate 20% of the total property held by foreigners but there are also, according to Le Monde, 3,256 French people (athletes, businessmen, large fortunes, etc.) who own just under 5,000 properties of an average value of $400,000. There are also a dozen Europeans involved in money laundering and corruption cases.

Dubai turns a blind eye to the source of the fortunes that invest in its territory because it is a pure tax haven, that is to say that it has no more income tax than capital tax. or on corporations. Gabriel Zucman, associate professor at the University of California at Berkeley, who heads the European Union Tax Observatory, explains to Le Monde that: “The risk is that real estate in Dubai replaces the account in Switzerland as a strategy for tax avoidance or concealment of wealth”. For him, this should lead regulators to include real estate in tax regulations because it is not covered by the automatic exchange of information between States which serves as the basis for the international fight against tax evasion.

A damaged image

Its fiscal attractiveness and its luxury hotels have made Dubai the favorite destination of French influencers, reality TV personalities and youtubers… who made the trip en masse during the Covid-19 crisis. The so-called #PortaPotty scandal which has been massively circulating on social media since April 30 revealed through a scandalous video that some reality TV influencers who had widely promoted Dubai were also engaged in prostitution there at high rates . This income is not subject to income tax any more than any other income.

Moral of this double scandal: Dubai will have to further increase its advertising budget to restore its luxury image by betting once again on the spectacular image of this clip for the country’s airline Emirates. It was filmed in 2021 on the tallest building in the world, the Burj Khalifa, at 828 meters high. On the other hand, the association of Dubai with the Football World Cup organized in Qatar in the autumn, should not improve its image. Its hotel offer should make it possible to accommodate most football supporters from all over the world, but new human rights violations were denounced in early April by an Amnesty International report. The NGO explains that the security agents are subjected to forced labor there. Tax evasion, corruption, prostitution, violation of human rights, the postcard of ultramodern cities reclaimed from the desert and the sea with giant buildings and infinity pools could end up permanently damaged!

Anne-Catherine Husson Traoré, @AC_HTCEO of Novethic

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