Determination of UAE tax residency. Resolution No. (85) 2022

Until recently, in the UAE, the issue of tax residency was resolved by issuing a tax residency certificate (TRC), but there were few criteria for determining residency. So, for example, individuals who stayed more than 183 days in the last 12 months could count on the status of a tax resident in the UAE, which had to be confirmed by the relevant documents.

The status of tax resident for companies was determined after at least one year after registration and submission of evidence required by the tax service (Federal Tax Authority – FTA).

According to the new Resolution, an individual will be a UAE tax resident if:

• the principal or predominant place of residence of the individual is in the UAE and the center of his economic and personal interests is in the UAE, or the individual meets other conditions established by law.
• the person has been physically present in the UAE for 183 days or more in the last 12 months.
• a person who is physically present in the UAE for 90 days or more in the past 12 months and is a UAE citizen, UAE resident or GCC citizen who either:
• has permanent residence in the UAE
• works or conducts business in the UAE

In accordance with the Resolution, a legal entity (organization or institution) will be a tax resident of the UAE if the organization:

• was established, formed or registered under the laws of the UAE (thus not including branches of foreign legal entities)
• considered tax resident under applicable UAE tax laws

The changes should come into effect on March 1, 2023. Most likely, before the changes come into force, the FTA will issue clarifications on the application of the Resolution.