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Understanding UAE Tax Residency

In a significant development, the UAE Federal Tax Authority (FTA) introduced a new resolution, “Cabinet Decision No. 85 of 2022,” on September 2, 2022. This resolution aims to determine the tax residency status of individuals and corporate entities in the UAE. The provisions outlined in this resolution will come into effect on March 1, 2023.

The new law establishes clear conditions that must be met for both natural and legal persons to be considered tax residents in the UAE. It also outlines the process through which individuals can achieve UAE tax residency. Let’s explore these conditions and procedures in detail:

Tax Residency for Natural Persons:

A natural person will be recognized as a Tax Resident of the UAE if they meet any of the following conditions:

Their usual or primary place of residence, as well as their personal and financial interests, are in the UAE.

They have physically stayed in the UAE for 183 days or more within a 12-month period.

They have physically stayed in the UAE for 90 days or more within a 12-month period if:

  1. They possess a legal right to reside in the UAE.
  2. They maintain a permanent place of residence in the UAE.
  3. They conduct business or are employed in the UAE.

Tax Residency for Legal Persons:

A legal person will be considered a Tax Resident of the UAE if:

It is incorporated or formed in the UAE.

It is deemed a tax resident under any other relevant legislation, such as the new UAE CT Law.

 

Tax Residency Certificate (TRC):

Once an individual fulfills the aforementioned conditions and is deemed a UAE tax resident, they can apply for a Tax Residency Certificate (TRC) from the FTA. The application process involves submitting an application to the FTA, which will review the submission and issue the TRC if all requirements are satisfied.

Previously, the UAE followed a strict criterion of 183 days of physical presence for individuals. However, the new law allows individuals with a permanent place of residence and/or business in the UAE to obtain tax residency by spending only 90 days in the country.

Similarly, tax residency for companies was previously based on the entity being incorporated for a minimum period of one year and the provision of specific documentary evidence, including a tax residency certificate.

Once individuals and entities acquire UAE tax residency, they gain access to the network of Double Tax Treaties established by the UAE with other countries. These treaties are instrumental in mitigating or eliminating instances of double taxation.

 

How Can We Assist You?

At IRIS GROUP, we specialize in providing comprehensive support for individuals and businesses navigating UAE tax residency requirements. Here’s how we can help:

We can assess your eligibility for a Tax Residency Certificate (TRC) based on the new rules.

We offer expert assistance with the TRC application process, ensuring all necessary documents are properly attested.

Our team can provide valuable insights into the interaction of Double Tax Treaties, helping you make informed decisions.

 

For more information and personalized assistance regarding UAE tax residency, please reach out to us using the contact details provided below.