Tax residency in the United Arab Emirates: comprehensive guide for entrepreneurs

May 11, 2024

When entrepreneurs consider relocating to the United Arab Emirates (UAE), a crucial question arises: tax residency. This concern is especially relevant for those planning to spend time and work in multiple countries. In this article, we will delve into the various aspects of tax residency in the United Arab Emirates, addressing the most frequently asked questions by entrepreneurs.

  1. What is tax residency?

Tax residency refers to the status assigned to an individual or entity by a country, indicating that they are subject to tax in that country. Simply put, being a tax resident in a country means you are obligated to pay taxes on your income and assets in that country.

  1. How to meet the criteria for tax residency in the UAE?

In the United Arab Emirates, tax residency is determined by several criteria, with the most important being physical presence. According to current legislation, a person is considered a tax resident if they spend more than 180 days per year in the country. An exception to this 180-day rule applies to holders of a golden visa, who are required to spend only 90 days in the territory to be considered tax residents in the United Arab Emirates. Other factors such as family ties, real estate investments, and place of residence may also be taken into account. However, this residency may be challenged by another country in which you hold assets or derive income. Therefore, it is also necessary to analyze the terms of the tax treaty concluded between the United Arab Emirates and the country in question.

  1. How to qualify as a tax resident under the tax treaty between the UAE and another country?

The United Arab Emirates has entered into tax treaties with numerous countries worldwide to prevent double taxation. These treaties establish specific criteria for determining tax residency in the event of conflicting laws between two states. Generally, if you meet the tax residency criteria of both countries under their respective legislation, the tax treaty will be used to resolve the issue. The tax treaty uses a combination of indicators to determine your tax residency, including the location of your family home, the center of your vital interests, and the center of your economic interests, including where you derive the majority of your income.

  1. How to obtain a tax residency certificate in the UAE?

To obtain a tax residency certificate in the United Arab Emirates, you generally need to submit an application to the relevant tax authorities. This application may require the submission of documents such as proof of residence, information about your economic activities, and income statements.

  1. How will my different incomes be taxed if I am a tax resident in the UAE?

As a tax resident in the United Arab Emirates, your income generated in the country will be subject to tax according to the prevailing tax regime, which is generally favorable with no personal income tax and corporate tax. However, income from foreign sources may be subject to tax in the countries where they are generated, depending on local tax laws and applicable tax treaties. In principle, according to the majority of tax treaties, all income except real estate income will be taxed in the United Arab Emirates when you are considered a tax resident in the UAE.

In conclusion, tax residency in the United Arab Emirates is a complex topic that requires a deep understanding of local tax laws and international treaties. Entrepreneurs considering relocating to the UAE can consult our tax experts for personalized advice based on their specific situation:

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