Revised Tax Residence Certificate Rules in UAE - Clarification Needed (2023)

[FinanceGuardian]

I hope you're all doing well. I'm writing to gain some insight and clarification regarding the revised Tax Residence Certificate rules in the UAE.

As many of you may be aware, the UAE Government, through ministerial decision No.27 of 2023, made amendments to certain provisions on the Determination of Tax Residence, providing clearer guidelines on the requirements for a natural person to qualify as a Tax Resident in the UAE.

In line with Cabinet Resolution No. 85, which became effective from 1 March 2023, the conditions for an individual to be considered as a Tax Resident in the UAE are:

1. Their principal place of residence and centre of financial and personal interests is in the UAE.
2. They have been physically present in the UAE for 90 days or more over a consecutive 12-month period and are either UAE nationals, UAE residents, or GCC nationals with either a permanent establishment, or they have a job or a business in the UAE.
3. The individual has been physically present in the UAE for 183 days or more in a consecutive 12-month period. Ownership of a permanent setup in the UAE is not mandatory, but they must have a place of residence available when in the country.

Furthermore, the Federal Tax Authority website states in its terms and conditions for the Issuance of Tax Certificates (Tax residency & commercial activity):
"2. An Applicant who is a natural person and applying for Tax residency certificate for treaty purposes, must have been residing in the UAE for at least 183 days during the requested financial year."

Here's where I need clarification:

If I leave a high-tax country (let's call it Country A) in late 2023 and aim to establish tax residency in the UAE, what would be the precise conditions for me to ask for a tax certificate for the year 2024 for treaty purposes with Country A? The terms seem to have some overlapping and potentially contrasting criteria.

Any guidance from those well-versed in the new rules or those who have had similar experiences would be greatly appreciated.

 

[Cloudbanck]

Most high tax countries do not ask for a tax residency certificate. What matters to them is whether you are in their tax net or not.
Also most high tax countries do not have a double taxation agreement with the UAE, so if they deem you to be in their tax net, you are required to pay full tax to them, regardless of if you have a tax residency certificate for the UAE or not, and regardless how much you and the UAE considers you a resident of the UAE.

But if country A happens to require a tax residency certificate, or you want to have one just in case: If you have an Emirates ID, and have spent 90 days in the UAE in one year, you can get a tax residency certificate. And even if you have spent less than 90 days it is possible to get one, check with Ancova Capital Management

 

[bonox]

What matters to them is whether you are in their tax net or not.

an important part to understand for most users who are not into all this.

 

[mgs999999999]

I hope you're all doing well. I'm writing to gain some insight and clarification regarding the revised Tax Residence Certificate rules in the UAE.

As many of you may be aware, the UAE Government, through ministerial decision No.27 of 2023, made amendments to certain provisions on the Determination of Tax Residence, providing clearer guidelines on the requirements for a natural person to qualify as a Tax Resident in the UAE.

In line with Cabinet Resolution No. 85, which became effective from 1 March 2023, the conditions for an individual to be considered as a Tax Resident in the UAE are:

1. Their principal place of residence and centre of financial and personal interests is in the UAE.
2. They have been physically present in the UAE for 90 days or more over a consecutive 12-month period and are either UAE nationals, UAE residents, or GCC nationals with either a permanent establishment, or they have a job or a business in the UAE.
3. The individual has been physically present in the UAE for 183 days or more in a consecutive 12-month period. Ownership of a permanent setup in the UAE is not mandatory, but they must have a place of residence available when in the country.

Furthermore, the Federal Tax Authority website states in its terms and conditions for the Issuance of Tax Certificates (Tax residency & commercial activity):
"2. An Applicant who is a natural person and applying for Tax residency certificate for treaty purposes, must have been residing in the UAE for at least 183 days during the requested financial year."

Here's where I need clarification:

If I leave a high-tax country (let's call it Country A) in late 2023 and aim to establish tax residency in the UAE, what would be the precise conditions for me to ask for a tax certificate for the year 2024 for treaty purposes with Country A? The terms seem to have some overlapping and potentially contrasting criteria.

Any guidance from those well-versed in the new rules or those who have had similar experiences would be greatly appreciated.

My understanding is:

1) 1 year lease agreement (can be in a cheap place)
2) stay at least 90 days
3) be an employee in the UAE (your own company should be ok if you self employed)
4) not spending more than 183 days on another country

Does everyone understand the same?

Best wishes,

 

[manukahoney]

Does everyone understand the same?

This has been discussed several times here.
Yes, 90 days + Ejari will give you a tax residence in UAE.
No, the UAE tax residence will not automatically get you rid of your previous tax residence - in fact, you can be a tax resident in multiple countries at the same time.
You must check with the tax code of the country you are currently paying tax.

 

[FinanceGuardian]

It seems that:

Now, there are two ways for individuals to obtain a Tax Residency Certificate in the UAE:

• Through the double tax treaty route (if any)
• Through the domestic route

domestic TRC : 1. The principal place of residence and center of financial and personal interests of an individual should be in the UAE.

domestic TRC : 2. Physical presence in the UAE for 90 days or more over a consecutive 12-month period is necessary. This is applicable to UAE nationals, UAE residents, or GCC nationals who either have a permanent establishment or are engaged in a job or business within the UAE.

Double Tax Treaty TRC : 3. Individuals must be present in the UAE for 183 days or more in a consecutive 12-month period. It's not mandatory to own a permanent establishment, but they should have a place of residence during their stay in the country.

In order to obtain a tax residency certificate under the double tax treaty between the UAE and country X (most DTA countries), you would need to satisfy the requirements of the UAE Federal Tax Authority, which stipulates 183 days of presence in the UAE in the requested financial year, among other requirements.

 

[mgs999999999]

It seems that:

Now, there are two ways for individuals to obtain a Tax Residency Certificate in the UAE:

• Through the double tax treaty route (if any)
• Through the domestic route

domestic TRC : 1. The principal place of residence and center of financial and personal interests of an individual should be in the UAE.

domestic TRC : 2. Physical presence in the UAE for 90 days or more over a consecutive 12-month period is necessary. This is applicable to UAE nationals, UAE residents, or GCC nationals who either have a permanent establishment or are engaged in a job or business within the UAE.

Double Tax Treaty TRC : 3. Individuals must be present in the UAE for 183 days or more in a consecutive 12-month period. It's not mandatory to own a permanent establishment, but they should have a place of residence during their stay in the country.

In order to obtain a tax residency certificate under the double tax treaty between the UAE and country X (most DTA countries), you would need to satisfy the requirements of the UAE Federal Tax Authority, which stipulates 183 days of presence in the UAE in the requested financial year, among other requirements.

If this is true. This would be the biggest piece of s**t ever.

Dubai would be liers and nobody would trust them

Why on earth is anyone going to apply for a domestic tax certificate that is only valid in the uae? that does not make any sense is like toilet paper

 

[yngmind]

I don't really want to dig to find the news I saw, but I remember hearing something that 90 days + lease etc. won't make a tax resident. of the UAE.

Like it doesn't work anymore.

 

[mgs999999999]

I really don’t understand why 90 days + lease doesn’t work. The decision cabinet literally says that. That’s the reason why I move there. They are liars. It’s unbelievable!

 

[yngmind]

Oh yeah, it was discussed recently Dubai 90 Days No Longer Possible (Must Be 180 Days!)