The Cabinet Resolution No. (85) of 2022, defining the updated criteria of UAE tax residency for legal and physical persons, has become effective as of 1 March, 2023.
Under the new legislation, the following definitions and criteria apply:
A legal person (entity or establishment) is a tax resident in the UAE if the entity:
- Was established, formed, or registered in accordance with the UAE laws, except for branches of foreign legal persons; or
- Is treated as a tax resident under the applicable UAE tax law. The upcoming Federal corporate income tax legislation should feature further details on this condition.
A physical person (an individual) is considered a tax resident in the UAE if:
- The individual’s usual or principal place of residence is in the UAE and the centre of their financial and personal interests is in the UAE, or if other conditions prescribed by the Minister are met; or
- The individual has been physically present in the UAE for a period of 183 days or more in a 12-month period; or
- The individual has been physically present in the UAE for a period of 90 days or more over a 12-month period and is a UAE citizen, UAE resident, or GCC national who either has a permanent place of residence in the UAE; or carries out a job or business in the UAE.
Thus, any individual who meets the criteria mentioned above can apply to the UAE Federal Tax Authority for a Tax Residency Certificate (TRC) as from 1 March, 2023.
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