New tax residency rules for the UAE

The new rules broaden the criteria of UAE tax residency and moves the UAE to be more in line with global compliance framework

The UAE government has announced new criteria that would determine the tax residency of natural and legal persons. Effective from 1 March 2023, the new criteria (officially named Cabinet Resolution No. (85) of 2022) will broaden the criteria of UAE tax residency for both individuals and entities.

Previously, tax residency was limited to a 183-day physical presence requirement. Under the new resolution, any legal entity or establishment is a tax resident in the UAE if:

  • The entity was formed, established, or registered under UAE laws (except branches of foreign legal persons); or
  • Is treated as a tax resident under UAE law, more details of which should be forthcoming in the new Federal corporate income tax legislation

For natural persons, they are considered a tax resident in the UAE if:

  • Their principal place of residence and their financial and personal interests are in the UAE; or
  • The individual has been physically present in the UAE for 183 days or more in a 12-month period; or
  • The individual is a UAE citizen, UAE resident, or GCC national who has a permanent place of residence in the UAE and has been physically present in the UAE for 90 days over a 12-month period; or performs a job or business in the UAE

The new criteria move the UAE towards global standards when it comes to tax residency and tax compliance, along with the UAE’s plan to raise its corporate tax from 0% to 9% from 1 June 2033. The UAE will continue to be a preferred destination for talent and international residents given its high quality of living it offers as well as its low tax rates.

For more information on tax residency in the UAE, contact Alpadis Group.