Tax residency is an important concept when it comes to tax planning and optimizing tax obligations. In the United Arab Emirates, as in many other countries, it is important to understand the criteria that determine who can be considered a tax resident. The specifics may vary, but some general factors that may contribute to obtaining UAE tax residency include:
- Duration of stay. One of the main criteria for tax residency in the UAE is the number of days you spend in the country. This is often measured on an annual basis, and exceeding a certain number of days in the country may trigger tax residency.
- Permanent residence. If you have received a permanent residence visa in the UAE, this may be a strong indicator of your tax resident status.
- Economic content. If your business activities are primarily located in the emirates, this may also lead to tax residency, especially for legal entities.
Thus, tax residence status determines that an individual or corporate person is considered a taxpayer in a particular country or jurisdiction for the purposes of tax law.
Formalising tax residency
The UAE is a well-respected option for individuals and companies looking to reduce their tax burden, as tax residents benefit from a tax-free environment and numerous DTAs. In order to establish tax residency in the UAE, there are several steps to follow:
- To prove your tax residency, certain documents and information are usually required. These documents may include
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For individuals |
For legal entities |
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Passport |
Certificate of incorporation |
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Current residence permit in the UAE |
Articles of Association |
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Document confirming UAE residence |
Bank statement (last 6 months) |
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Income statement |
Audited financial statements |
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Bank statement (last 6 months) |
- Once the application and documents have been submitted, the tax authority will review your application and carry out the necessary checks. The waiting period for approval may vary depending on individual circumstances.
- If the application is approved, the applicant company will be issued with a United Arab Emirates Tax Resident Certificate. This certificate confirms tax residency status and can be used for various tax and financial transactions.
Each emirate in the UAE may have its set of guidelines and procedures for tax residency certification, so it is essential to seek professional advice to navigate this process effectively.
What has changed since the FTA innovations?
- A company can now be considered a UAE tax resident if it is registered for corporate taxation, maintains financial records and submits tax returns to the FTA.
- An individual may qualify as a tax resident of the UAE based on the facts of residence:
- long-term - permanent residence in the Emirates;
- short-term - if you have a passport, residence permit or permanent residence in the Emirates, is a citizen of one of the Gulf countries, holds a position or conducts business.
- A person may also be considered a UAE tax resident if he is a related person to the holder of the UAE tax residence certificate through a contract, financial or corporate control or interest.
Conclusion
The UAE's decision to define tax residence and eliminate double taxation situations is an important step towards transparency and protecting the interests of both UAE citizens and international investors. This brings the country in line with global standards in terms of tax compliance.
If you are interested in determining your eligibility for UAE tax residency status or obtaining a tax residency certificate, you can contact the specialists at IQ Decision UK for detailed advice on UAE business rules and support throughout the company registration process. We will assist you at every stage of the process, taking into account current changes in UAE regulations.
