UAE: New proposed tax residency test for natural and legal persons

Statutory requirements and conditions for natural and legal persons to determine tax residency in the UAE

Statutory requirements and conditions for natural and legal persons

The government recently issued “Cabinet Resolution No. (85) of 2022 Regarding Determining Tax Domicile” which would introduce new statutory requirements and conditions for natural and legal persons to determine tax residency in the UAE—effective from 1 March 2023.


Previously, the UAE did not have a statutory definition for “tax residency.” The Ministry of Finance, which was later replaced by the Federal Tax Authority (FTA), determined tax residency for natural and legal persons by way of issuing tax residency certificates (TRCs).

Tax residency for natural persons was determined primarily based on the number of days spent in the UAE (i.e., more than 183 days in a 12-month period) substantiated with the certain documentary requirements.

Similarly, tax residency for companies was based on the entity being incorporated for a minimum period of one year and the provision of certain documentary evidence as required by the FTA.

New tax residency test

Under the Resolution, a natural person (i.e., an individual) would be tax resident in the UAE if:

  • The individual’s usual or principal place of residence is in the UAE and the center of his financial and personal interests are in the UAE or the individual meets the other conditions prescribed by the Minister
  • The individual has been physically present in the UAE for a period of 183 days or more in a 12-month period
  • The individual has been physically present in the UAE for a period of 90 days or more over a 12-month period and is a UAE citizen, UAE resident, or GCC national who either:
    • Has a permanent place of residence in the UAE
    • Carries out a job or business in the UAE

Under the Resolution, a legal person (i.e., entity or establishment) would be tax resident in the UAE if the entity:

  • Was established, formed, or registered in accordance with the UAE laws (thus not including branches of foreign legal persons)
  • Is considered as a tax resident under the applicable UAE tax law

More clarity on the second condition is expected once the implementing draft legislation is released.

The FTA would be responsible for issuing clarifications and directives for implementation of the new tax residency test, and for issuing TRCs in accordance with the new test. However, the current procedure and documentation requirements for obtaining the TRC may be substantially amended.

KPMG observation

The new statutory definition broadens the criteria of UAE tax residency, for natural persons in particular. However, it should be noted that the conditions for determining tax residency under any income tax treaty that the UAE has concluded with its partner jurisdictions would still prevail.  

Read a November 2022 report prepared by the KPMG member firm in the United Arab Emirates


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