UAE Tax Residency in 90 Days

In a bold initiative to enhance its global economic standing, Dubai has introduced a transformative Cabinet Resolution No. 85 of 2022, fundamentally redefining tax residency criteria and offering a streamlined pathway for individuals and corporations to benefit from its favourable tax policies.

Understanding the Resolution

The resolution, effective March 1, 2023, outlines explicit criteria for determining tax residency in the UAE, a landmark shift from its previous reliance on tax treaties and the Federal Tax Authority’s standards. This provides much-needed clarity and a structured approach for those seeking tax residency in the UAE.

Criteria for Individuals

For individuals, the resolution presents three key options to establish tax residency:

1

Principal Residency and Financial Interests:
Individuals whose primary residence and central financial interests are in the UAE can now claim tax residency.
2

Physical Presence:
The traditional criterion remains, where staying in the UAE for 183 days or more in a 12-month period automatically grants tax residency status.
3

The 90-Day Rule:
The most notable inclusion is the option to become a tax resident by spending at least 90 days in the UAE within a 12-month period. To qualify under this rule, an individual needs to be physically present in the UAE for a total of 90 days or more within a consecutive 12-month period, have permanent place of residence in the State or conduct employment or business in the State.

Corporate Tax Residency

For corporations, the resolution stipulates two main pathways:

1

Establishment in the UAE:
Entities formed or registered as per UAE laws, excluding foreign legal person branches, are eligible for tax residency.
2

Management and Control:
Companies effectively managed and controlled from the UAE, even if established elsewhere, might qualify as tax residents under certain conditions, aligning with the upcoming federal corporate income tax legislation.

Implications and Benefits

This development is more than a procedural update; it represents a strategic enhancement of the UAE’s tax landscape. For individuals, it means enjoying the UAE's zero personal income tax policy. For corporations, it opens doors to leveraging Double Taxation Avoidance Agreements (DTAAs) and establishing tax-efficient corporate structures.

A Global Perspective

Experts view this as a step towards aligning the UAE with global tax compliance frameworks. It also reflects the UAE's commitment to fostering a stable and attractive environment for international business and investment.

Conclusion

With Cabinet Resolution No. 85 of 2022, the UAE reaffirms its position as a leading destination for those seeking a favourable tax regime. This move not only benefits the current and future population of the UAE but also significantly contributes to the nation’s vision of global economic integration and growth.