ITC Accounting and Tax Consultancy

New UAE Tax Residency criteria applicable from 1st March 2023

Decision No. 85 of 2022, issued by the UAE Cabinet of Ministers on 9 September 2022, introduces a new domestic definition and criteria for determining when an individual or legal entity is considered a Tax Resident of the UAE under any UAE tax law or bilateral tax agreement. The implementation of this definition will begin on 1 March 2023, and further clarification on the definitions relevant to the Tax Resident definition for individuals is provided in Ministerial Decision No. 27 of 2023, published on 1 March 2023.

The domestic Tax Resident definition conforms to internationally recognized standards and offers more clarity to individuals and legal entities regarding their UAE tax residency status. The new definition will also help in the application of the bilateral tax agreements that the UAE has signed with other territories, as many of these agreements refer to the domestic laws of the UAE for determining residency. With this new domestic law in place, a clear definition of Tax Resident in the UAE will be available, facilitating the issuance of tax residence certificates under these treaties.

This article was published on  13 February 2023

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