The practical implementation of corporate tax on the specific situation outlined in the “Implementation of Certain Provisions of Cabinet Decision No. 85 of 2022 on Determination of Tax Residency” involves determining the tax residency status of natural persons who are owners or stakeholders in the small businesses. Here’s how it can be implemented:

1. Identification of Natural Persons:

• In the context of small businesses, the first step is to identify the natural persons who have significant ownership or management roles in the company. These individuals are generally the shareholders, directors, or key executives who have a direct influence on the business’s financial and operational decisions.

2. Usual or Primary Place of Residence:

• The decision provides a definition of a natural person’s usual or primary place of residence. It is considered to be in the UAE if the person habitually or normally resides in the country. This means that the UAE is the jurisdiction where the individual spends most of their time as part of their settled routine, and this presence is more than transient.

3. Centre of Financial and Personal Interests:

• The tax residency status is also influenced by a natural person’s center of financial and personal interests. If the UAE is the jurisdiction where the individual’s personal and economic interests are closest or of the greatest significance, then the UAE would be considered the center of financial and personal interests.

4. Factors for Determination:

• To establish a natural person’s center of financial and personal interests in the UAE, various factors are taken into account. These include:
• Place of occupation: If the individual is primarily engaged in work or business activities in the UAE, it can indicate a center of financial interest.
• Familial and social relations: Close family ties or significant social connections in the UAE can contribute to establishing the center of personal interest.
• Cultural or other activities: Participation in cultural events, hobbies, or other activities in the UAE may be considered when determining the center of personal interest.
• Place of business: If the person’s business operations are mainly conducted from the UAE, it can further strengthen the case for UAE tax residency.
• Place of property administration: If the individual manages their assets and properties from the UAE, it may support the UAE as the center of financial interest.
• Other relevant facts and circumstances: Any other relevant aspects, such as the duration of stay, community involvement, and lifestyle choices, can be taken into consideration.

5. Submission of Supporting Documents:

• To prove their tax residency status in the UAE, natural persons may need to submit supporting documents such as residency visas, utility bills, employment contracts, bank statements, and other evidence that demonstrates their substantial ties to the country.

6. Taxation and Reporting Obligations:

• Once the tax residency status is determined, the natural persons will be subject to the UAE’s tax laws, and they must fulfill their taxation and reporting obligations accordingly.

In conclusion, the practical implementation of corporate tax in the context of tax residency determination for natural persons involved in small businesses requires an assessment of their usual or primary place of residence and their center of financial and personal interests in the UAE. The decision considers various factors, and supporting documents may be required to substantiate the tax residency status. Once determined, individuals are subject to the UAE’s tax laws and must fulfill their taxation and reporting obligations accordingly.