- January 31, 2023
- Posted by: Vimal Hemachandran
- Category: Blog
The Federal Tax Authority of the UAE has declared the implementation of Cabinet Resolution No. (85) of 2022 on assessing tax residency, which will take effect on March 1, 2023. But in order to comply with international taxes and be in accordance with the new corporate tax structure that the UAE plans to implement beginning in June 2023, the government created the law to stay ahead of the country’s continuously evolving tax climate.
There are rules in place for determining whether someone qualifies as a tax resident of the UAE. The conditions that have been established for determining the tax residence of juridical and natural persons within the UAE are summarized as follows:
A. Juridical Person
A juridical person should be treated as a UAE tax resident when one of the following conditions is met, under the Resolution:
If it has been created, incorporated, or recognized in accordance with the state’s laws in operation, this excludes any branches that a foreign juridical entity has registered therein.
In accordance with the state’s existing tax legislation, it is treated as a resident for tax purposes.
B. Natural Person
According to Article 4 of the resolution, natural persons are treated as tax residents in the UAE if any of the following conditions are met:
The person’s financial and personal operations are concentrated in the UAE, in addition to other terms and conditions specified in a special decision (to be) issued by the UAE MoF. The UAE should also be the person’s normal or primary place of residence.
Over the course of a year, the individual has physically resided in the UAE for at least 183 days.
The individual is a national of the GCC, a resident of the UAE, or a UAE citizen who has physically lived there for at least 90 days in the previous 12 months.
Stay in the United Arab Emirates permanently; or
Operates a business or has a job in the UAE.
C. International Agreement
The resolution states that a treaty should continue to be in force if it contains explicit guidelines for determining tax residence. However, in order to determine their tax residence with the objective of executing an international agreement, UAE people must refer to the specific criteria specified in the international agreement itself.
To appropriately identify their resident status for tax purposes in the UAE, businesses and individuals in the UAE should abide by the resolution’s conditions. This is an extremely noteworthy breakthrough that will ensure compliance with methods utilised in other countries and so give an independent framework.
Carvy Consultants to Assist!
It is in compliance with tax regulations to get competent tax guidance and assistance for your company’s governance. An effective tax plan offers an unbiased perspective on the business model and individual components.
CARVY CONSULTANTS is open to providing any services related to the Tax Residency Certificate or the Tax Domicile Certificate in the UAE. By obtaining the necessary paperwork and certificates, our professional team will simplify your job and ensure that the TRC procedure is completed on schedule.