It has become vital to determine tax residency in the UAE, particularly after the introduction of the UAE corporate tax law. The UAE Ministry of Finance has issued the “Ministerial Decision No. 27 of 2023” on the determination of Tax Residency. The Ministerial decision clarifies the rules to these provisions under Cabinet Decision No 85 of 2022 on Determination of Tax Residency.
The decision also sets out more details on when an individual’s place of residency and center of financial and personal interests would be in the UAE. Tax agents in Dubai can help you to determine the tax residency in line with the Cabinet Decision No 85 of 2022 and the new Decision. Keep reading to understand the main points of Ministerial Decision no 27 of 2023.
Usual Or Primary Place Of Residence Of An Individual
The Ministerial decision states that a person’s primary or usual place of residence is in the UAE where UAE is the jurisdiction. The place where the person resides in the jurisdiction and spends most of his time. A person can only have one residence at any given time, but they can share the residence with other people. A primary residence is considered to be a legal residence for the purpose of acquiring a mortgage or income tax.
The Centre Of Financial And Personal Interests
A natural person’s center of personal and financial interests is in the UAE if the UAE is the jurisdiction. The ministerial decision mentions a few factors to take into account while knowing the natural person’s center of personal and financial interest. It includes:
- Social and familial relations.
- The place of occupation of the person.
- Cultural or other activities.
- Any other relevant circumstances and facts.
- Place of business.
- The place from which the property of the natural person is administered.
Calculation Of Time Period To Determine Tax Residency
As per the ministerial decision, all parts of a day on which a natural person is physically present in the UAE are counted to determine the total number of days the person is physically present in the UAE during a one-year time period.
If the natural person extends his stay in the UAE due to any other circumstances, that day will be disregarded by the FTA in determining whether the person has met the 183-day or 90-day threshold. The decision defines an exceptional circumstance as any situation or event that prevents the person to leave the UAE as planned originally. However, this situation or event should occur while the person is present physically in the UAE and must be beyond the control of the natural person.
Clarification On Permanent Place Of Residence
A natural person need not own their permanent place of residence as per the decision but a place that is available for them. The condition of being available will be determined based on whether the individual has the right of occupation at all times. Consult with your tax consultants in Dubai for further information on a permanent place of residence.
Tax Agents In Dubai Can Help You With Tax Residency Issues
It is actually critical to determine the new guidelines of the Ministry of Finance as it clarifies key provisions like a permanent place of residence, primary or usual place of residence, and the time period for determining tax residency.
If you are struggling to determine your tax residency, tax agents in Dubai such as ebs can assist you. We have helped many businesses to stay compliant with the new laws and regulations in Dubai. ebs has a team of experts that keep updated about the new tax update and can help you grow your business.
ebs likewise offer services, such as accounting and bookkeeping services, VAT services, Auditing, Due Diligence audit services, and many more.
Feel free to contact us with any additional inquiries or requests for accounting services. A free discussion will be given to you by our specialists, who will answer your request immediately.