On 2 September 2022, the UAE Cabinet (Cabinet) issued Decision No. 85 of 2022 (Decision) redefining the criteria of tax residency for both individual and legal persons in the UAE.
The Decision introduces granular conditions to be met for a natural or legal person to be considered a tax resident of the UAE, as well as procedural aspects of the application for issuance Tax Residency Certificates (TRC/s). It also clarifies specific rules around the concept of tax residency in a bilateral treaty context.
While further clarifications are expected via Ministry Decision on conditions and criteria of usual or principal place of residence and center of financial and personal interests, the long-awaited announcement is a substantial step forward in aligning the UAE with international best practices.
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Key takeaways
When will it apply?
- From 01 March 2023.
- To define the requirements and conditions to be met by a Person – natural or legal – to be considered a UAE Tax Resident.
An individual will be deemed a tax resident in the UAE if he/she meets any of the following criteria:
- he/she has been physically present in the UAE for 183+ days during the relevant 12-month period.
- he/she i) has been physically present in the UAE for 90+ days during the relevant 12-month period, ii) holds a valid residence permit in the country [or nationality of any GCC State], and iii) has in the UAE
» a permanent place of residence or
» a job or Business - Does not meet any of the day counting tests but has his/her i) usual or principal place of residence and ii) center of his/her financial and personal interests in the country – per conditions and criteria to be specified by Ministry decision.
See our factsheet below for a better understanding!
Authors
Jenitha Raghu
Team Leader – Labour & Immigration (M/HQ)
Keerthi Voodimudi
Director of Tax (Re/think)