Becoming a Tax Resident in the UAE: What You Need to Know

Under the new Corporate Tax regime, UAE Tax Resident certificate legal entities may be subject to the new Corporate Tax starting from June 1, 2023, as per Federal Decree-Law number 47 of 2022 concerning the taxation of corporations and businesses. Meanwhile, foreign legal entities may also be required to pay taxes, but only under the Corporate Tax regime.

According to Article 6 of the Cabinet Decision, if an international agreement such as a tax treaty outlines tax residency conditions for a UAE Tax Resident, those provisions will remain in effect. The Ministry of Finance will issue residency certificates in the prescribed form and method for such agreements.

If individuals fall under the definitions of tax residency mentioned above, they must obtain a Tax Domicile Certificate (TDC) by applying to the Federal Tax Authority (FTA), UAE, as per Article 5 of the Decision, to avail of the benefits and reliefs available.

The FTA is responsible for providing additional information and clarification on Cabinet Decision No. 85 of 2022. Additionally, it will establish regulations to gather the necessary information required for the implementation of the Decision’s provisions. UAE government entities are obligated to collaborate with the FTA to ensure the seamless execution of the Decision.

Previously, tax residency in the UAE was based solely on international treaties, with no domestic legislation in place. Introducing local tax residency criteria provides greater clarity and specific guidelines for those who fall under its jurisdiction.