January 9, 2023
There has been an update to the criteria for individuals and legal persons to achieve tax residency in the UAE under Cabinet Decision 85 of 2022, which come into effect from 1 March 2023.
Whilst the new regulations have streamlined the criteria and made tax residency more accessible, there individual scenarios that should still be considered in relation to planning for tax residency to ensure that it is achieved.
Whilst there is still no income tax on the income of individuals resident in the UAE, there are several reasons why an expatriate will need to demonstrate tax residency in meeting their filing obligations in their home or other countries of possible tax residency.
You will be considered as tax resident in the UAE if you meet one or more of the following conditions:
i) You have been physical present in the UAE for 183 days or more during the 12period, or
ii) You have been physically present for 90 – 182 days, as long as you also have a UAE residency visa and a permanent place of residence. If you do not have a permanent place of residence, you may still apply if you are employed or have a business, or
iii) Your center of financial interests are in the UAE, under conditions to be further defined and applied on a case by case basis.
Companies and other legal entities are considered tax resident if one or more of the following conditions are met:
iv) The entity is incorporated in the UAE, or
v) OtherUAE legislation deems the entity to be resident, or
Branches of local or foreign entities are not considered to be separate legal persons and would generally not be considered tax resident.
Whilst the new regulations have streamlined the criteria and made tax residency more accessible, there individual scenarios that should still be considered in relation to planning for tax residency to ensure that it is achieved.
We would recommend that you review the substance of your business and your personal arrangements carefully and be ready by planning well ahead of the period that you will require tax residency.
As always, do reach out to your contact at OnPro to discuss further.
