UAE Tax Residency Explained – What It Means, Who Qualifies, and Why It Matters

Understanding tax residency is crucial for individuals and businesses operating in the UAE. With the UAE’s attractive tax environment—no personal income tax, no capital gains tax, and no inheritance tax—knowing the rules helps you plan effectively and avoid surprises.

1. Why Tax Residency Matters

Your tax residency status determines: - Which country can tax your income. - Whether you can claim benefits under double tax treaties (DTAs). - How you structure your business and personal finances. For global businesses and high-net-worth individuals, UAE tax residency can result in significant savings and better planning options.

2. How Individuals Qualify as UAE Tax Residents

From March 2023, under Cabinet Decision No. 85 of 2022, you are considered a UAE tax resident if you meet any one of the following rules:

Option A: The 183-Day Rule

Spend 183 days or more in the UAE in a 12-month period.

Option B: The 90-Day + Ties Rule

Spend 90 days or more in the UAE within a 12-month period AND: - You are a UAE or GCC national, or you hold a valid UAE residence permit. - You own or rent a permanent home in the UAE, or you work/run a business here.

Option C: The Centre-of-Interests Rule

Even without 90 or 183 days, you may qualify if: - The UAE is your main place of residence. - Your financial and personal interests (family, business, property, etc.) are mainly based in the UAE.

3. Clarifications on Counting Days

- All days count, even partial days, including arrival and departure days. - Days do not need to be consecutive. - If travel was delayed due to emergencies or unforeseen events, those days may sometimes be excluded.

4. Companies and Legal Entities

A company or legal entity is UAE tax resident if: 1. It is incorporated or established in the UAE (including Free Zones), OR 2. It is managed and controlled from the UAE, even if set up abroad. This is important for multinational groups with management teams based in the UAE.

5. Tax Treaties and Double Taxation

Many countries have tax treaties with the UAE. These treaties:

• Help avoid double taxation on the same income.
• May have different residency definitions than UAE local law.

When there’s a conflict, the treaty rules take priority. If two countries both claim you as a resident, “tie-breaker rules” apply, looking at:

• Your permanent home
• Your centre of vital interests
• Where you usually live
• Your nationality
• Mutual agreement between the two tax authorities.

6. Getting a Tax Residency Certificate (TRC)

A TRC proves your UAE tax residency and is essential for:

• Claiming tax benefits under treaties.
• Providing proof to foreign tax authorities or banks.

Application Process:

• Apply online through EmaraTax (the UAE tax authority portal).
• Provide documents such as:  
• Entry/exit records,  
• Rental contracts,  
• Utility bills,  
• Employment or business documents.

Fees

7. Why This Matters for You

• Individuals: Helps secure lower foreign tax rates and avoid paying tax twice.
• Businesses: Supports efficient international tax planning and compliance.
• Investors: Provides certainty when structuring assets and global holdings.

Conclusion: Simplifying Tax Residency

UAE tax residency rules are now clear and standardized, making it easier for individuals and businesses to plan with confidence.

Remember:

• 183-day rule is the simplest way to qualify.
• 90-day rule works if you also have strong ties to the UAE.
• For companies, where they’re managed matters as much as where they’re set up.

By securing a Tax Residency Certificate, you not only gain proof of residency but also access treaty benefits that can save you money and reduce tax complexity. In short, understanding and applying these rules correctly ensures you maximize the UAE’s tax advantages while staying compliant globally.