The New UAE Tax Residency Rules

The New UAE Tax Residency Rules

11/21/2022
The New UAE Tax Residency Rules

The New UAE Tax Residency Rules

The UAE government has approved Cabinet Resolution No. 85 of 2022 providing guidelines to determine the tax residency for “natural and legal” persons and shall be effective from 01 March 2023.

Prior to such Cabinet Decision, no statutory definition was available on the procedure for applying for a Tax Residency Certificate (“TRC”) - except for the user guidelines provided by the UAE Federal Tax Authority (“FTA”).

Particulars

(New) Cabinet Resolution No. 85 of 2022

(Old) FTA’s TRC User Guide

Residency test for legal persons

  1. Incorporated, formed, or recognized under the UAE Laws excluding foreign branch offices.
  2. Tax resident as per the applicable tax law.

 

Incorporated for at least a year with documentary evidence.

Residency test for natural persons

  1. Usual/primary place of residence and center of financial and personal interests are in the UAE or;
  2. Physical presence in the UAE for at least 183 days within a 12-month period or;
  3. Physical presence in the UAE for at least 90 days within a 12-month period and is a UAE citizen/UAE residence permit holder/GCC national who either:
  • Has permanent residence in the UAE.
  • Has a job or business in the UAE.

Resident of the UAE for at least 180 days with documentary evidence.

 

Conflict of residency with international agreements

Double tax treaty prevails.

No specific guidance.

Governing body

The FTA approves the application and issues the TRC.

 

The FTA determines the residency status and issues the TRC.

 

Key Takeaways

The issuance of guidelines for determining the tax residency reflects the commitment of the UAE to adapt to the evolving UAE Tax landscape to 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, Crowe UAE can help with:

  1. Assisting in assessing eligibility for obtaining TRC.
  2. Assisting in filing a TRC application.
  3. Liaising with the FTA and obtaining the TRC. 

Contact Us

Markus Susilo
Markus Susilo
Partner, Tax Advisory
Deepika Chandak
Deepika Chandak
Director - Global Mobility & Consulting
Alessandro Valente
Alessandro Valente
Director - International Tax Service & Transfer Pricing