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Upcoming Changes to the UAE Tax Residence Regulations

Some changes to the tax residence regulations are expected to come into force in the United Arab Emirates soon. Taxes are comparatively low in the country, which makes a number of people from other national states seek tax residence in the UAE.

UAE Tax Residence

Tax residence regulations for legal entities in the UAE

A legal entity can be considered a tax resident of the UAE on the following grounds:

  • If the legal entity has been established, formed or registered in the UAE in accordance with the local legislation. Please note that branches and subsidiaries of foreign companies that are located in the UAE are not considered tax residents of the country.
  • The legal entity qualifies as a tax resident of the UAE in accordance with the local legislation.

Tax residence regulations for physical persons in the UAE

A physical person can be considered a tax resident of the UAE on the following grounds:

  • If the person permanently lives in the UAE and the country is the center of their personal and financial interests.  
  • If the person has been physically present in the United Arab Emirates for 183 days or more during the period of 12 consecutive months.
  • If the person has been physically present in the UAE for 90 days or more during the period of 12 consecutive months and the person is a citizen of the UAE, a residence permit holder or a citizen of any member state of the Cooperation Council for the Arab States of the Gulf. Besides, the person needs to meet following requirements:
    • They have a place of residence in the UAE available to them at any time.
    • They are employed by a local company or they run a business in the UAE. The word ‘business’ here refers to any kind of activity that is performed on a regular and independent basis by a legal entity or a physical person. This can be production, commerce, professional services, land development, agriculture, or any activity involving the use of material or non-material resources.

The term ‘residence permit’ above refers to a permanent residence card issued by the UAE immigration authorities that grants the holder the right to live and work on the territory of the country. Visas issued to tourists, sportsmen or those people undergoing medical treatment in the UAE are not considered residence permits.

Please note that there are Free Economic Zones in the UAE and a business company can be registered both inside such a zone and outside. The company registered inside a Free Economic Zone cannot engage in any business activities outside this Zone. At the same time, it is possible to acquire a ‘double license’ that allows working both inside an FEZ and in other areas of the country as well. In addition, you can register an offshore company in the UAE but then it will have the right to do business only outside the United Arab Emirates. Whether the company is registered in a FEZ or not, the company owner as well as the company employees qualify for residence visas in the UAE. If the visa holder has a sufficient income, he or she can also apply for residence visas for the members of his/ her family.   

The UAE tax residence certificate

If a physical person meets the criteria specified above, they can file an application to the Federal Tax Administration for a tax residence certificate. Please note that the application has to be filed in accordance with all the official requirements. If you meet the criteria and do the paperwork carefully, the Tax Administration will issue the UAE tax residence certificate to you.

The UAE international agreements

If there is an international agreement signed by the UAE that regulates the granting or tax residence to citizens of a certain foreign country, then it is going to be applied to such people. The Minister of Finance has to issue a resolution that will grant tax residence of the UAE to the foreign applicant in accordance with the international agreement.

The powers of the UAE Tax Administration and cooperation with the body

The UAE Tax Administration is entitled to request any information and any documents from any state body of the country in order to find out if a certain person meets the requirements relevant to his/ her tax residence status. This means that any Government body of the UAE has to cooperate with the Tax Administration and supply all the required data and documents.

Executive decisions pertaining to tax residence in the UAE

The UAE Minister of Finance is responsible for making all executive decisions that concern tax residence in the country. These include granting the UAE tax residence to foreign nationals and controlling the implementation of all the relevant regulations. The Tax Administration, in its turn, is responsible for providing explanations and issuing directives pertaining to the implementation of tax residence-related regulations.

The new UAE tax residence regulations entry into force

The new UAE tax residence regulations are coming into effect on March 1, 2023. We will be happy to provide professional assistance to you in acquiring a tax residence certificate in the UAE. The fastest way to acquire a residence visa to the country is by registering a business company there. If you can demonstrate having a sufficient income, you will also be able to apply for residence visas for your family members. Besides, purchase of real estate in the United Arab Emirates can make you qualified for a residence permit. We will also be delighted to assist you in opening personal and corporate bank accounts in the UAE. 

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