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UAE’s decision on ‘ tax residency is now in effect’

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The resolution clarifies the rules for natural and legal persons in the Emirates

The UAE’s Ministry of Finance on Wednesday announced a decision regarding the issue of tax residence for the residents of the Emirates. An individual’s “usual place of residence” will be in the UAE if it is where he regularly or usually resides, according to the government.

The ministerial decision no. 27 of 2023 on the execution of some aspects of cabinet decision no. 85 of 2022 on the determination of tax residency made this a key point.

The Cabinet Decision No. 85 of 2022 on the determination of tax residency for natural persons and legal persons, which was published in September 2022, is clarified by the decision. The ruling, for instance, specifies that a person’s “centre of financial and personal interests” will be in the UAE if this is where their professional, interpersonal, and/or commercial ties are the strongest.

The resolution further states that while evaluating whether the 183-day or 90-day limits have been met, any days or portions of days on which a person is physically present in the UAE will be taken into account. Additionally, the ruling states that a person does not need to own their “permanent place of home,” but rather that it must always be accessible to them.

Younis Haji Al Khouri, Undersecretary of the Ministry of Finance, stated that the Ministerial Decision on implementing domestic tax residency regulations is significant because it provides greater clarification to people regarding when they are regarded to be tax residents under UAE taxation laws.

According to domestic definitions and rules outlined in UAE cabinet decision No. 85 for 2022, which went into force on Monday, an individual or a legal entity may be classified as a tax resident of the UAE.

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