UAE Tax Residency Rules
Interaction with tax treaties
1) Introduction
Tax residency rules play a critical role in establishing the criteria for determining the tax residency status within a state. Such rules are vital to prevent double taxation and ensure an equitable distribution of the tax obligations.
The UAE Cabinet of Minister has issued Federal Decision No. 85 of for 2022 outlining the guidelines and standards to determine the tax residency for the UAE tax purposes.
2)
|
Natural Person |
Juridical Person |
|
|
UAE residency Rules |
Incorporated within the UAE |
|
Conducts business activity in the UAE |
Corporate Tax (“CT”) Law |
|
|
Tax Treaty |
Incorporated or created under the UAE laws or managed in the UAE |
3) Analysis
- No link exists between the Decision no. 85 and the UAE CT Law
- In case of inconsistency in the provisions of
the CT Law with the tax treaty, the tax treaty provisions shall prevail.
4) Impact
- Decision No. 85 aids in establishing a person’s connection in the UAE.
- For taxation, tax residency provisions under
CT Law or tax treaty shall prevail.
5) How to claim treaty benefit?
Step 1- Determine the eligibility.
Step 2- Apply to the UAE tax authorities to obtain a TRC.
Step 3- Issuance of TRC by the UAE tax authorities.
Step 4- Submit TRC to foreign tax authority.
Step 5- Claim treaty benefit through tax return or treaty benefit form.
Step 6- Receive Approval.
6) How
can Crowe help?
- Assessing the tax residential status and identify any potential tax implication.
- Advising on the tax implication of cross-border transaction and help them structure transaction in a tax-efficient manner.
- Assisting in developing tax planning strategies that take into account the tax residency and tax treaty provisions, helping to minimize tax liabilities and optimize tax positions.
- Assistance in obtaining tax residency certificate.
