The UAE’s Ministry of Finance has issued a new Ministerial Decision, No. 27 of 2023, which outlines the Implementation of Certain Provisions of Cabinet Decision No. 85 of 2022 on the Determination of Tax Residency in the UAE.
This important update brings with it a number of key highlights that individuals and businesses operating in the UAE need to be aware of.
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Clarification on Tax Residency Conditions
One of the main features of this Ministerial Decision is that it provides greater clarity on certain tax residency conditions that were set out in Cabinet Decision No. 85 of 2022.
This clarification relates to tax residency conditions for both natural persons and legal persons.
It is important for individuals and businesses to understand these conditions in order to properly determine their tax residency status in the UAE.
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Centre of financial and personal interests
If a person’s professional, personal, economic links, or other connections are concentrated in the UAE, this is where their “center of financial and personal interests” will be. The Decision further states that while considering whether the 183-day or 90-day limits have been fulfilled, any days or portions of days on which an individual is physically present in the UAE shall be taken into account. A person does not need to own their “permanent place of residence,” but it must be continually accessible to them, according to the Judgment.
The UAE Cabinet Decision No. 85 of 2022, which will enter into force on 1 March 2023, provides domestic definitions and rules for determining whether an individual or a legal entity may be considered a Tax Resident of the UAE. The Ministerial Decision on Implementation of Certain Provisions of Cabinet Decision No. 85 of 2022 on Determination of Tax Residency is available on the Ministry of Finance’s website: www.mof.gov.ae.
