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On 2 September 2022, the UAE Federal Tax Authority (FTA) issued a new resolution “Cabinet Decision No. 85 of 2022.” The objective of this new law will be to determine the UAE tax residency status of an individual or corporate entity. The provisions of this resolution will take effect from 1 March 2023.
The new law sets out the conditions that must be met for either a natural or legal person to be considered tax resident in the UAE and the process by which a person would achieve UAE tax residency. These conditions and procedures have been summarised below.
A natural person will be considered a Tax Resident of the UAE if:
• Their usual or primary place of residence and personal/financial interests are in the UAE;
• They were physically present in the UAE for 183 days or more during a period of12 months
• They were physically present in the UAE for 90 days or more during a period of 12 months where:
i. They have a legal right to reside in the UAE; and
ii. They have a permanent place of residence in the UAE; or
iii. They carry on a business or employed in the UAE
A legal person will be considered Tax Resident of the UAE if:
• It is incorporated / formed in the UAE; or
• It is considered a tax resident under any other applicable legislation (such as the new UAE CT Law).
Once a person is deemed to be UAE tax resident according to the above conditions, they may work on obtaining a tax residency certificate. This will be done by making an application to the FTA. If the FTA is satisfied with the application and believes the conditions are met, they should issue the tax certificate.
Previously, the UAE had a strict 180-day physical presence criteria for individuals. This new law will allow individuals with a permanent place of residence and/or business in the UAE to obtain tax residency whilst only spending 90 days in the country.
Equally, tax residency for companies was previously based on the entity being incorporated for a minimum period of one year and the provision of certain documentary evidence, such as a tax residency certificate.
Once these individuals and entities have UAE tax residency, they will be able to access the network of Double Tax Treaties (DTT) the UAE has with other countries.
The DTA’s may allow UAE tax residents to obtain beneficial treatment on their tax treatment in other jurisdictions, as well as other opportunities.
· We can help individuals/legal persons to assess if they are now eligible for TRCs where previously they were not entitled to apply for one.
· Assist with TRC application and having foreign tax documents attested by the FTA.
· Advice on the interaction of Double Tax Treaties.
For more information on this topic, please contact us using the information below.
For UK businesses considering opportunities in Saudi Arabia, the following steps outline the overall process:
1. Business Activity: Determine the appropriate business activity which will aligns with your business and satisfies all undertakings you will engage with in the Kingdom.
2. Local Partnerships: Consider any potential opportunities for collaborations with established local businesses to ease market entry and meet regulatory requirements.
3. Documentation: Gather the required documentation for incorporation in KSA.
4. Company Registration: Work with experts and the relevant governing bodies to assist with the incorporation process, ensuring compliance with local laws and regulations.
5. Other Requirements: Consider any other requirements for establishing in Saudi Arabia such as capital and tax requirements.
Saudi Arabia's Vision 2030 represents a significant opportunity for UK businesses to engage with an expanding market with vast potential. As the Kingdom continues to diversify its economy and expand its global influence, UK companies are well-positioned to support and benefit from this transformation. With the right strategy, partnerships, and local support, there are a wealth of possibilities.
By aligning your business with Saudi Arabia’s Vision 2030, the benefits for UK and international businesses looking to Saudi Arabia have never been greater.
At Sanctuary, we specialise in assisting businesses looking to expand into Saudi Arabia. We help navigate the complexities of the Saudi market, ensuring that you have the expertise needed to best prepare for success, so get in touch today.
Our expert team offers comprehensive support across a range of services, from company registration, advisory services, and more. Explore our services to discover how we can help you.
Vision 2030 is a strategic framework designed to diversify Saudi Arabia’s economy, reduce its dependency on oil, and transform the Kingdom into a global business hub.
Key points include economic diversification, social reforms, investment in technology and infrastructure, sustainability, and creating a competitive workforce.
The main focus of the Saudi Arabian Vision 2030 strategy is to build on key economic sectors such as hospitality, travel and tourism and build economic stability and sustainability.
Saudi Arabia’s Vision 2030 initiative is aimed at diversifying its economy through strategic investments into the non-oil sector and ensuring a more sustainable economic future.
Saudi Arabia has committed over $500 billion to Vision 2030, funding projects that span a variety of sectors, including energy, tourism, and infrastructure.
Yes, with its growing economy, reform initiatives, and investment incentives, Saudi Arabia is a highly attractive destination for foreign businesses seeking growth opportunities.
Key growing industries include renewable energy, tourism, healthcare, technology, and education.
Saudi Arabia permits foreign owned businesses and investment into the Kingdom, which has been elevated by the Vision 2030 initiative. A MISA licence is required for foreign investors or businesses to establish.
As a result of the diversification efforts of Saudi Vision 2030, the non-oil and private sector in the Kingdom have witnessed unprecedented growth in the past few years. The private sector continues to grow each quarter and the non-oil sectors continue to reach record contributions for the Kingdom’s GDP.
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