UAE Tax Residence

UAE Tax Residence & Certificates of Tax Residence

The UAE Government has approved Cabinet Resolution No. 85 of 2022 that provides guidelines for determining the tax residency for “legal (entities or establishments) and natural (individuals) persons” and will be effective from 1st March 2023. 

Link to Cabinet Resolution No. 85 of 2022 here.

Before the Resolution there was no statutory definition of UAE tax residency. The Resolution broadens the criteria of UAE tax residency for natural persons which was previously limited to a strict 183-day requirement for physical presence. This introduction reflects the UAE’s continued measures to “adapt to the increasingly globalized economy and in line with the evolving tax landscape in the UAE.”

Criteria under the Resolution, a legal person (entity or establishment) is a tax resident in the UAE if the entity:

1. Was established, formed, or registered in accordance with UAE laws, except for branches of foreign legal persons; or 
2. Is treated as a tax resident under the applicable UAE tax law. The imminent Federal corporate income tax legislation should feature more details on this condition. 

Natural persons (individuals) are tax residents in the UAE if:

1. The individual’s usual or main place of residence is in the UAE and the center of their financial and personal interests are in the UAE, or other conditions prescribed by the minister; or 

2. The individual has been physically present in the UAE for a period of 183 days or more in a 12-month period; or 

3. The individual has been physically present in the UAE for a period of 90 days or more over a 12-month period and is a UAE citizen, UAE resident (residence visa via ownership of a Free Zone Company), or GCC national who either has a permanent place of residence in the UAE or carries out a job or business in the UAE. 

“With the existing Double Taxation Agreements (DTA) that the UAE has with many countries, along with more forecasted to be agreed, this legislation is a logical step to provide both companies and natural persons with a clearer position when determining tax residency in line with global standards.”

The issuing of guidelines for determining tax residency reflects the commitment of the UAE to adapt to the evolving UAE Tax landscape in line with the recent radical international tax developments.

Substantial changes in the existing procedure and in the documentation requirements for obtaining a TRC are anticipated. As such, our Firm can assist with:

1. Assessing eligibility for obtaining TRC;
2. Filing a TRC application;
3. Liaising with the Authorities and obtaining the TRC;