New UAE tax residency criteria

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

• has their usual or primary place of residence and their centre of financial and personal interests in the UAE;

• was physically present in the UAE for a period of 183 days or more during a consecutive 12-month period;

• was physically present in the UAE for a period of 90 days or more in a consecutive 12-month period and the individual is a UAE national, holds a valid residence permit in the UAE or holds the nationality of any GCC Member State, where:

(i) he or she has a permanent place of residence in the UAE; or

(ii) he or she carries on an employment or a business in the UAE.

What does the new UAE Tax Resident definition mean for individuals?

• The introduction of the new UAE tax residency criteria for individuals does not mean individuals will be subject to personal income tax in the UAE.

• The UAE does not levy any personal income tax on the employment or other personal income of individuals. As such, where individual meet the above criteria to be considered a UAE Tax Resident, they would generally not be subject to taxation in the UAE on their personal income.

• The new Tax Resident definition gives additional clarity to individuals in respect of their UAE tax residency position under bilateral tax agreements the UAE has entered into with other territories, many of which make reference to the domestic laws of the UAE for determining whether a person is a resident of the UAE for purposes of the treaty. 

The new definition of juridical person generally refers to an entity established or otherwise recognised under the laws and regulations of the UAE, or under the laws of a foreign jurisdiction, that has a legal personality separate from its founders, owners and directors. Examples of UAE juridical persons include a limited liability company, a foundation, a public or private joint stock company, and other entity forms that have separate legal personality under the applicable UAE mainland legislation or the regulations of a free zone.

A.juridical person is considered to be a Tax Resident of the UAE if:

a. it is incorporated or otherwise formed or recognised in the UAE; or

b. it is otherwise considered a Tax Resident of the UAE under the applicable legislation in the UAE.

UAE branches of a domestic or a foreign juridical person are an extension of their “parent” or “head office” and are not considered separate juridical persons. A branch of a foreign juridical person registered in the UAE would therefore generally not be considered a Tax Resident of the UAE.

What does the new UAE Tax Resident definition mean for juridical persons?

• Juridical persons which are considered to be UAE Tax Resident may be liable to Corporate Tax in the UAE under the Corporate Tax Law.

• The Cabinet Decision refers to the “applicable Tax Law” (the Corporate Tax Law) to determine whether a foreign juridical person is Tax Resident. For any other person, the UAE tax residency requirements are set out in Cabinet of Ministers Decision No. 85 for 2022.