Ministry of Finance Issues Ministerial Decision on Implementation of Certain Provisions of Cabinet Decision on Determination of Tax Residency

• The Ministerial Decision clarifies certain ‘tax residency’ rules set out in the Cabinet Decision No. 85 of 2022.

• When determining the number of days that an individual has spent in the UAE, all days, or parts of a day in which the individual is present in the UAE would be counted.

• An individual does not need to own their ‘permanent place of residence’, but such place must be continuously available to them.

Abu Dhabi, UAE- 01 March 2023: The Ministry of Finance in the UAE has issued the Ministerial Decision No. 27 of 2023 on Implementation of Certain Provisions of Cabinet Decision No. 85 of 2022 on Determination of Tax Residency.

The Ministerial Decision clarifies certain rules set out in the Cabinet Decision No. 85 of 2022 on Determination of Tax Residency for natural persons and legal persons, which was issued in September 2022. For instance, the Decision states that an individual’s ‘usual place of residence’ will be in the UAE if this is where he normally or habitually resides.

An individual’s ‘centre of financial and personal interests’ will be in the UAE if this is where their work, personal, economic relationships or other connections are the strongest. The Decision also specifies that all days or parts of a day in which an individual is physically present in the UAE will be counted in determining whether the 183-day or 90-day thresholds are met. In addition, according to the Decision, an individual does not need to own his ‘permanent place of residence’, but such place must be continuously available to them.

“The Ministerial Decision on implementing domestic tax residency rules is important as it gives additional clarity to individuals in respect of when they are considered as Tax Residents under UAE taxation laws” said His Excellency, Younis Haji Al Khouri, Undersecretary of the Ministry of Finance.

The UAE Cabinet Decision No. 85 of for 2022, which will enter into force on 1 March 2023, provides domestic definitions and rules for determining whether an individual or a legal entity may be considered a Tax Resident of the UAE. The Ministerial Decision on Implementation of Certain Provisions of Cabinet Decision No. 85 of 2022 on Determination of Tax Residency is available on the Ministry of Finance’s website: www.mof.gov.ae.

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