The Latest on UAE’s Tax Residency Rules: A Comprehensive Guide

Ministry of Finance announced Decision (no.27 of 2023), adding clarity to determine tax residency as per UAE Cabinet Decision no. 85 of 2022.

Legal entities must be established or recognized within the country to be UAE tax residents. This excludes branches of foreign entities. Companies outside the UAE can qualify if their management and control are in the UAE.

Physical presence in the UAE is a determining factor for tax residency of natural persons.

Individuals with personal and financial ties in the UAE who stay for at least 183 days within 12 consecutive months are deemed tax residents.

For UAE citizens, residents, and GCC nationals, the 90-day rule applies when they are physically present in the UAE for 90 days (or part of them) for 12 months. The latest decision clarified that owning a permanent residence is unnecessary as long as it is accessible.

The latest Ministerial decisions clarify the UAE’s 183-day rule for tax residency. Both financial and personal interests are now considered when determining tax residency. Even if a natural person stays for only 90 days, significant connections with the UAE could lead to tax residency status.

Another small detail added to determining one’s tax residency is that parts of the days will also count towards the 90-day and 183-day rules. This part significantly affects all professionals based in Dubai whose professions require substantial travel outside the Emirates.

For professionals based in Dubai who travel extensively outside the Emirates, it’s worth noting that partial days count towards the 90-day and 183-day rules. This can have a significant impact on determining their tax residency.