Short stay, big benefits – UAE’s Domestic Tax Resident in 90 days or less.

In March 2023, the Ministerial Decision No. 27 on Implementation of Certain Provisions of the Cabinet Decision No. 85 of 2022 on Determination of Tax Residency, published a new domestic definition and conduct for when an individual or legal entity shall be considered a tax resident of the UAE.

This domestic Tax Resident definition is now associated to the internationally recognized standards and provides further clarification to individuals and legal entities in lieu of their Tax Residency position in the UAE. The new law will determine whether a natural person is a resident of the UAE for reasons of the respective treaties of the bilateral tax agreements.

Tax Residency for Individuals in the UAE

A natural person will be considered a Tax Resident of the UAE if the individual:

• has their primary place of residence and their centre of financial and personal interests in the UAE.
• was physically present in the UAE for a period of 183 days or more during a consecutive 12-month period.
• was physically present in the UAE for a period of 90 days or more in a consecutive 12-month period, and the individual is a UAE national, holds a valid residence permit in the UAE or holds the nationality of any GCC Member State, where:

a) he or she has a permanent place of residence in the UAE
b) he or she carries on an employment or a business in the UAE

• was physically present in the UAE for a period of 90 days or less, in a consecutive 12-month period.

Impact of the new UAE Tax Resident Criteria on Individual

• With the launch of the new UAE Tax Residency criteria, individuals will not be subjected to any tax on their personal incomes or employment in the UAE.
• Individuals are exposed to an additional clarification in terms of their tax residency position, under the bilateral tax agreement the UAE has entered with other territories, in reference to the domestic laws of the UAE for determining whether a person is a resident for purposes of the treaty.
• The new decision will not refute the fact that the UAE Corporate Tax will treat foreign individuals conducting business in the UAE as a ‘Resident Person’ in terms of determining the person’s business income is taxable in the UAE. This concept is unrelated to whether the natural person is considered a Tax Resident in the UAE for other taxation purposes.

Important Facts

If the individual has stayed in the UAE for less than 180 days, more than 90 days, and less than 90 days in a continuous 12-months period, all day or parts of a day in which the individual was physically present in the UAE will be counted. This upfront rule will allow the individuals to easily track their days in the UAE, and also, the number of days does not need to be consecutive.

Documents Required

Applicant is a natural person spending days in the UAE for less than 183 days, and equal or more than 90 days, and or less than 90 days can submit:

• Passport and Emirates ID/ UAE Visa residence
• Entry and exit report from the Immigration Department
• Salary certificate
• EJARI, Utility Bills or Other long-term Rent Contract
• 6-months Personal Bank Statement

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