UAE unveils tax residency criteria

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Martin Everson

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  1. Criteria


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The UAE government has proposed guidelines to determine tax residency for “natural and legal persons” in the country, according to law firm Al Tamini & Company.


The resolution will become effective from 1 March 2023.

Prior to the resolution, there was no statutory definition of UAE tax residency. It broadens the criteria of UAE tax residency, in particular for natural persons, which was previously limited to a strict 183-day physical presence requirement.

Law firm Al Tamini & Company said in a Linkedin post: “This introduction reflects the UAE’s continued measures to adapt to the increasingly globalised economy and in line with the evolving tax landscape in the UAE.”

The official name of the legislation is Cabinet Resolution No. (85) of 2022.


Criteria

Under the resolution, a legal person (entity or establishment) is tax resident in the UAE if the entity:

  • Was established, formed, or registered in accordance with the UAE laws, with the exception of branches of foreign legal persons; or
  • Is treated as a tax resident under the applicable UAE tax law. The imminent Federal corporate income tax legislation should feature further details on this condition.

Natural persons (individuals) are tax resident in the UAE if:

  • The individual’s usual or principal place of residence is in the UAE and the centre of their financial and personal interests are in the UAE or other conditions prescribed by the minister; or
  • The individual has been physically present in the UAE for a period of 183 days or more in a 12-month period; or
  • The individual has been physically present in the UAE for a period of 90 days or more over a 12-month period and is a UAE citizen, UAE resident, or GCC national who either has a permanent place of residence in the UAE; or carries out a job or business in the UAE.
Brett Evans, managing director of Emea at Atlas Wealth Management, said: “To me, this is another step that the UAE are taking towards a global tax compliance framework and is an expected move with the new company tax that is being introduced in 2023.

“With the existing Double Taxation Agreements (DTA) that the UAE has with many countries, along with more forecasted to be agreed upon, this legislation is a logical step to provide both companies and natural persons with a clearer position when determining tax residency in-line with global standards.”

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khinkali

Silver Member
UAE resident + 90 days will be appealing to many people.

But, it will become much easier to be tax resident in UAE and a high tax country.
 

Fred

Dubai Expat
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Thanks @Martin Everson for sharing this.

That explains basically why we could get for clients already this year after the 1st quarter has passed a Tax Residence Certificate.

At least this was the case when they were employed in there own FZCO and paid themselves a monthly salary to a local UAE Personal Bank Account from the local UAE Business Bank Account.
 

Martin Everson

Offshore Retiree
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Hypothetically this new rule could mean if your flagged as a UAE non-tax resident you will be considered tax resident elsewhere. UAE banks would have to ask where your tax residency is or determine this themselves via indicia and start CRS reporting your account there.
 

zzzzzz

Active Member
Hypothetically this new rule could mean if your flagged as a UAE non-tax resident you will be considered tax resident elsewhere. UAE banks would have to ask where your tax residency is or determine this themselves via indicia and start CRS reporting your account there.
If indicia is OK, how will the bank know how much time you spend in the UAE? Unless UAE tax office sends a return message to the bank.
 

Martin Everson

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If indicia is OK, how will the bank know how much time you spend in the UAE? Unless UAE tax office sends a return message to the bank.

Good question. Could be linked to your UAE ID card. To be honest no idea. Best to wait and see and just ensure you are really tax resident.
 

Konstanz

Entrepreneur
Good question. Could be linked to your UAE ID card. To be honest no idea. Best to wait and see and just ensure you are really tax resident.
Very easy. They will request to provide UAE tax residence certificate. Failing provide that will automatically consider non UAE tax resident.
Residence card a.k.a residence permit/visa is different document than UAE tax residence certificate
 

zzzzzz

Active Member
Very easy. They will request to provide UAE tax residence certificate. Failing provide that will automatically consider non UAE tax resident.
Residence card a.k.a residence permit/visa is different document than UAE tax residence certificate
If you're deregistered in your country of citizenship (tax non-resident with no ties there) I don't think any CRS reporting there will help, especially if you haven't spend a day there. You're ties are in UAE (visa, income, phone number, health insurance, driving license, apartment, wife/kids if you have any).
Nothing wrong with spending time in a few different countries and not spending x days in UAE, right?
And we are talking only about UAE FI, let's not start with foreign FI...
 

Fred

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Good question. Could be linked to your UAE ID card. To be honest no idea. Best to wait and see and just ensure you are really tax resident.
Very easy. They will request to provide UAE tax residence certificate. Failing provide that will automatically consider non UAE tax resident.
Residence card a.k.a residence permit/visa is different document than UAE tax residence certificate
Guys you made me laugh when we see in daily business that the immigration is run on Windows95 - believe me one thing - it's much less behind here then people can even imagine.
 

Berti

New member
Guys you made me laugh when we see in daily business that the immigration is run on Windows95 - believe me one thing - it's much less behind here then people can even imagine.
But still there is the question what will happen with the people who have Dubai residence but don't stay in Dubai 90 days or more. How will banks react regarding CRS when these people cannot provide a Dubai tax certificate? Probably not known at this time.

But on the other hand why would anyone have a tax number in Dubai when there is zero personal tax? Everyone would have to get a tax number/certificate just to satisfy the banks. Would be crazy.
 

Fred

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But still there is the question what will happen with the people who have Dubai residence but don't stay in Dubai 90 days or more. How will banks react regarding CRS when these people cannot provide a Dubai tax certificate? Probably not known at this time.

But on the other hand why would anyone have a tax number in Dubai when there is zero personal tax? Everyone would have to get a tax number/certificate just to satisfy the banks. Would be crazy.
What?

Sorry but since almost 2 years its a hypotetical discussion here about UAE Banks and CRS.

When you get onboarded with the necessary substance a good Service Provider can give you on hand along with being a Resident in the UAE - the CRS reporting is not triggered.

Yes believe it or not - it's like this or where are the guys here at the forum screaming around they got reported? Not existing.

I mean why is a A380 from Munich to Dubai fully booked in August - because of the nice weather?

It's far away from reality going then further and thinking about reporting based on some not existing Tax Number.
 

Martin Everson

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Because the germans are cheapskates and use dubai as a hub to asia, for example. They would even risk their lives and take a stopover in the war zone of yemen to save 50 cents.

LOL....your crazy rof/%
 

Konstanz

Entrepreneur
UAE is a 3rd world country just with Chinese quality skyscrapers. Can't image what condition most of the buildings be there in 15-20 years.
Every time I am in Dubai I have this feeling the city is built "temporary". It's not that expensive city, but you still feel that in many better places you overpay for no reason. Also food quality / taste in restaurants isn't that good. Alcoholic cocktails are very bad in most places around Dubai.
Dubai just has that weird Chinese Disneyland vibe.
Just open propertyfinder and look how most apartments look there from inside. All apartments look the same. It seems already old even if it's newly built :D
 

drumtraks

New member
UAE is a 3rd world country just with Chinese quality skyscrapers. Can't image what condition most of the buildings be there in 15-20 years.
Every time I am in Dubai I have this feeling the city is built "temporary". It's not that expensive city, but you still feel that in many better places you overpay for no reason. Also food quality / taste in restaurants isn't that good. Alcoholic cocktails are very bad in most places around Dubai.
Dubai just has that weird Chinese Disneyland vibe.
Just open propertyfinder and look how most apartments look there from inside. All apartments look the same. It seems already old even if it's newly built :D
Off-topic but, as for contrary thought… I find Dubai as one of the best places to eat in the world. And I come from a place with amazing cuisine. A lot of the people I know share the same opinion.

Some apartments are crap, some are ok. I’m yet to see high quality building as per European standards.
 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member
Ok can we please stay on topic....thx.
 

karishi

Active Member
So my understanding is that we are making confusion between tax residency and residency. AFAIK if you are a resident in the UAE the bank will not report you by CRS. To be clear, to open a bank account you just need a residence visa and an emirates ID, so in case they could onnly report you to your country of citizenship through the passport linked to the EID. I've not read anywhere that the rule that you are a resident if you enter every six months will change. Being a resident is different from being a tax resident, and in my opinion here they relaxed the rules for tax residency. Basically having a house, living there for 3 months and then renting it on airbnb might be enough to qualify you as a Fiscal Resident, down from 180 days. At that point you just need to avoid triggering residency anywhere else and you are ok . I have no idea what banks will do, probably depends on a bank by bank basis, I hope that before reporting anything they will contact you.
What?

Sorry but since almost 2 years its a hypotetical discussion here about UAE Banks and CRS.

When you get onboarded with the necessary substance a good Service Provider can give you on hand along with being a Resident in the UAE - the CRS reporting is not triggered.

Yes believe it or not - it's like this or where are the guys here at the forum screaming around they got reported? Not existing.

I mean why is a A380 from Munich to Dubai fully booked in August - because of the nice weather?

It's far away from reality going then further and thinking about reporting based on some not existing Tax Number.

Hypothetically this new rule could mean if your flagged as a UAE non-tax resident you will be considered tax resident elsewhere. UAE banks would have to ask where your tax residency is or determine this themselves via indicia and start CRS reporting your account there.
What is the difference from now?I mean, right now AFAIK if you are not a tax resident but you are a resident, you don't get reported.
 

Konstanz

Entrepreneur
So my understanding is that we are making confusion between tax residency and residency. AFAIK if you are a resident in the UAE the bank will not report you by CRS. To be clear, to open a bank account you just need a residence visa and an emirates ID, so in case they could onnly report you to your country of citizenship through the passport linked to the EID. I've not read anywhere that the rule that you are a resident if you enter every six months will change. Being a resident is different from being a tax resident, and in my opinion here they relaxed the rules for tax residency. Basically having a house, living there for 3 months and then renting it on airbnb might be enough to qualify you as a Fiscal Resident, down from 180 days. At that point you just need to avoid triggering residency anywhere else and you are ok . I have no idea what banks will do, probably depends on a bank by bank basis, I hope that before reporting anything they will contact you.



What is the difference from now?I mean, right now AFAIK if you are not a tax resident but you are a resident, you don't get reported.
Yes, but CRS is based on "tax residence", not on "residence"
Also you can be tax resident and resident in multiple countries
 

karishi

Active Member
Yes, but CRS is based on "tax residence", not on "residence"
Also you can be tax resident and resident in multiple countries
AFAIK it is based on residence. For example interactive broker doesn't ask you for a tax residence certificate, but for a proof of residence certificate like an Ejari. The "assumption" so far has been that resident -> tax resident in UAE for the banks. As other have suggested that might change, but so far it has been this way. I mean when you open a bank account in the UAE they don't even ask you for a proof of residence, a PO BOX is enough
 
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