On 22 February 2023, Ministry of Finance (‘MoF’) of UAE has issued guidance on implementation of certain provisions of cabinet decision vide Ministerial Decision No. 27 of 2023 explaining various crucial terms playing vital role in determination of tax residency such as Primary Place of Residence, Permanent Place of Residence, Centre of Financial and Personal Interest, Employment etc. Earlier, UAE had issued Cabinet Decision No. 85 of 2022 effective w.e.f. 01 March 2023 for determination of tax residency in UAE wherein provisions for determination of tax residency of juridical and natural person were introduced. 

 

In this newsflash, we have summarized the provisions of tax residency in UAE for ease of understanding, some of the significant highlights for determination of residency of natural persons include:

An Individual shall be considered a tax resident in the state of UAE if any of the following condition is satisfied:

 

  • The ‘Primary Place of Residence’ and ‘the Centre of Financial and Personal Interest’ are in UAE; or

 

  • If physical presence in UAE is for a period of 183 days[1] or more in 12 consecutive months; or

 

  • In case of UAE or Cooperation Council (‘GCC’) national having permanent place of residence and/ or business or employment in UAE and such national is physically present in UAE for a period of 90 days or more in a 12 consecutive months;

 

Further, if Double Tax Avoidance Agreement (‘DTAA’ or ‘tax treaty’) specifies certain conditions for determination of tax residency, then the provisions of DTAA shall be applicable.  For example, DTAA between India and UAE provides that an individual who is present in the UAE for a period or periods totalling in the aggregate at least 183 days in the calendar year concerned, shall be considered as UAE resident.  It is notable that currently there is no amendment made to the said DTAA.

 

For more details, refer the enclosed newsflash.

 

Happy Reading !

 

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