The newly passed legislation (Cabinet Resolution No. 85 of 2022), determines the criteria according to which any person - whether legal or natural - may be considered as a "tax resident" in the United Arab Emirates. Consequently, such persons may apply to obtain a "tax residency certificate (TRC)" from the Federal Tax Authority (FTA).

Articles (3) and (4) of the above mentioned Resolution set out the conditions for being considered a tax resident in the State. These conditions are as follows:

A. For Legal/Juridical Persons:

A legal person is considered a tax resident if it meets any of the following conditions:

1. If it is established, formed or recognized in accordance with applicable UAE legislation (doesn't apply to branches registered by foreign legal persons).
2. If it is considered a tax resident pursuant to the applicable tax laws.

B. For Natural Persons:

A natural person is considered a tax resident if he/she meets any of the following conditions:

1. Main place of residence and center of interests (financial and personal) are in the UAE.
2. Physically present in the UAE for (183) days or more during the relevant (12) consecutive months period.
3. Physically present in the UAE for (90) days of more during the relevant (12) consecutive months period and holds the UAE nationality/residency or a residency in any GCC state and meets the following:
   
   1. Having a permanent place of residence in the State.
   2. Practicing a job or business in the State.

What is the importance of the Tax Residency Certificate?

Obtaining a Tax Residency Certificate will enable UAE residents to benefit from the application of Double Taxation Treaties, in case they are citizens of any of the States signing such a treaty with the UAE. Usually, in order to benefit from such treaties, the resident/citizen is required to present a tax residency certificate. This is now possible to UAE residents pursuant to the new resolution.