I. A natural person will be a UAE Tax Resident if the individual:

• Spend at least 183 days in the UAE in a calendar year
• Have a valid UAE residence permit (or equivalent document) issued by the competent authority
• Physically present in the UAE for at least 90 days during 12 months, and the person is a national of the UAE, has a valid residency permit in the UAE, or is a citizen of any GCC Member State where:
  • They have a permanent address in the UAE, or
  • They are employed or operating a business there.

II. What do the new UAE Tax Resident criteria imply for individuals?

• The implementation of the new UAE tax residence criteria does not imply that individuals will be liable to personal income tax.
• Individuals’ jobs or other personal income is not taxed in the UAE. As a result, if an individual meets the aforementioned for being considered a UAE Tax Resident, they will not be liable to taxation in the UAE on their income.

III. What does the new UAE Tax Resident definition imply for juridical persons?

• The new definition of a juridical person broadly refers to an entity recognized by UAE law or the laws of a foreign jurisdiction that has a legal personality distinct from its founders, owners, and directors.
• A UAE juridical person can be a limited liability company, a foundation, a public or private joint stock company, or any other entity that has its legal personality under UAE mainland legislation or free zone regulations.
• Under the Corporate Tax Law, judicial people who are deemed as UAE Tax Residents may be subject to Corporate Tax in the UAE.
• To decide whether a foreign juridical entity is a Tax Resident, the Cabinet Decision refers to the “applicable Tax Law” (the Corporate Tax Law).
• The UAE tax residence requirements for all others are outlined in Cabinet of Ministers Decision No. 85 for 2022.

A juridical person is regarded as a Tax Resident of the UAE if:

• It is incorporated, created, or recognized in the UAE; or
• It is otherwise regarded as a UAE Tax Resident under applicable UAE legislation.
• UAE branches of a regional or global juridical person are an extension of its “parent” or “head office” and are not considered different juridical persons.
• So, a branch of a foreign juridical person incorporated in the UAE is often not treated as a UAE tax resident.

Bottom Line

These criteria will help to determine an individual’s fiscal obligations in the UAE, including their liability to pay taxes on their income. It is important to note that the new guidelines only apply to individuals, and not to companies or other legal entities. Additionally, the guidelines do not supersede any existing double-taxation agreements between the UAE and other countries.

Overall, the new guidelines on determining tax residency in the UAE provide greater clarity and transparency for individuals living and working in the country by helping them better understand their financial obligations and plan for their future.