UAE Tax Residency

18 November 2022

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.

Natural Persons:

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 of 12 months; or

•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

Legal Persons:

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).

Tax Residency Certificate (TRC)

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 183-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 the UAE has with other countries which can help limit or eliminate double taxation.

How Can We Help?

•We can help you assess if you are eligible for a TRC under the new rules.

•We can assist with an application for a TRC and arrange for attestation of any necessary documents.

•We can advise on the interaction of Double Tax Treaties.

For more information on this topic, please contact us using the information below.