Tax Residency in the UAE: Benefits and the Application Process

According to the official guidance notes for the Common Reporting Standard (CRS), the United Arab Emirates (UAE) offers the opportunity to become a tax resident, presenting attractive prospects for individuals and businesses seeking to take advantage of the country’s financial benefits.

A tax resident in the UAE can be an individual of any nationality holding a valid Emirates ID and UAE residency visa. This status is also available for legal entities established, managed, and controlled within the UAE.

To obtain tax residency status in the UAE, one must meet any of the following criteria:

1. Co-founders (shareholders) of UAE companies, including offshore companies registered in Free Economic Zones, as well as local resident companies. Notably, offshore companies are not eligible for UAE tax residency status.
2. Employees of UAE firms working under employment contracts.
3. Investors who invest a minimum of AED 1,000,000 (approximately USD 274,000) in UAE real estate.

Setting up a company in the UAE is one of the most advantageous routes to obtaining tax residency. In this case, the residency visa only needs to be renewed once every 2-3 years, which is much more convenient compared to the annual visa renewal required for property owners.

One of the key benefits of UAE tax residency is that individuals are not required to reside in the country for 181 days or more per year. It is sufficient to enter the UAE at least once every 180 days. Additionally, tax residents in the UAE enjoy almost complete tax exemption.

Obtaining tax residency in the UAE offers several additional advantages. Residents have the right to open bank accounts within the country and lease properties for residential or business purposes. It is also noteworthy that the UAE does not participate in the automatic exchange of information on tax residents under CRS, making it an attractive jurisdiction for residency.

The process of obtaining tax residency status in the UAE involves several steps. Firstly, one needs to establish a company in the UAE and obtain a residency visa and Emirates ID based on the company’s sponsorship. After six months of obtaining the residency visa, individuals can apply for a tax residency certificate by providing a lease agreement for UAE accommodation. Furthermore, all new and existing businesses must register in the “E-channel” system. A certificate of good conduct, issued and attested by the relevant authorities in the applicant’s country of residence and authenticated by the UAE embassy and Ministry of Foreign Affairs, is also required for obtaining the certificate.

The tax residency certificate in the UAE is issued by the Ministry of Finance and allows individuals and legal entities to avoid double taxation. It is recognized by the UAE authorities and grants the right to exempt taxes in the individual’s country of permanent residence. The certificate is valid for one year and requires annual renewal.

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