# UAE Domestic Tax Residency Criteria The conditions for determining UAE domestic tax residency are outlined in Article 53 of Federal Decree-Law No. 28 of 2022 and Cabinet Decision No. 85 of 2022. Further guidance, particularly for individuals, is provided under Ministerial Decision No. 27 of 2023. Meeting these criteria establishes a person as a UAE Tax Resident. Upon successful application to the Federal Tax Authority (FTA), a Tax Residency Certificate (TRC) may be issued as proof of tax residency status. This certificate is often required by banks and other institutions. Being recognized as a Tax Resident does not automatically create a Corporate Tax liability. An individual or entity must also qualify as a Taxable Person under the UAE Corporate Tax Law. ## Tax Residency for Juridical Persons Under Article 3 of Cabinet Decision No. 85 of 2022, a juridical person, meaning a legal entity, is considered a UAE Tax Resident if: - It is incorporated, registered, or otherwise established in the UAE; or - It is classified as a Tax Resident under other UAE tax laws, including the Corporate Tax Law. ## Juridical Persons Formed in the UAE Legal entities may take various forms, including: - Limited Liability Companies (LLCs), Private Shareholding Companies, and Public or Private Joint Stock Companies - Civil Companies - Foundations - Trusts, as per Federal Law No. 31 of 2023 These rules apply equally to businesses established in UAE Free Zones. If a juridical person is incorporated in a Free Zone, it is still recognized as a UAE Tax Resident and can apply for a Tax Residency Certificate. ## Examples of Juridical Person Tax Residency ### UAE-Based Juridical Person Company ABC is an LLC registered in Dubai with operational branches in Sharjah and Abu Dhabi. Because it is incorporated in the UAE, Company ABC qualifies as a UAE Tax Resident. Its branches in other emirates are treated as extensions of its Dubai head office. ### Foreign Company with UAE Clients Company P is incorporated and managed in Country P. It earns substantial revenue from UAE customers but has no physical presence or dependent agents in the UAE. Company P is not a UAE Tax Resident merely because it generates income from the UAE. ## Juridical Persons Classified as Tax Residents Under Other UAE Tax Laws A juridical person may also be treated as a UAE Tax Resident if it qualifies as a Resident Person under other UAE tax laws, such as the Corporate Tax Law. Even if an entity is not incorporated in the UAE, it can be considered a Resident Person if it is effectively managed and controlled from within the UAE. ### Foreign Company Managed in the UAE Company D is incorporated in Country D. In 2024, its management and control functions were exercised from the UAE. As a result, Company D became a Resident Person for Corporate Tax purposes, and its worldwide income became subject to UAE Corporate Tax. ## Tax Residency of Foreign Companies with UAE Branches A UAE branch of a foreign juridical person is generally treated as an extension of the parent or head office, not as a separate legal entity. Therefore, where the foreign company is incorporated and effectively managed in another jurisdiction, its UAE branch is not classified as a UAE Tax Resident. Instead, the foreign parent company is treated as a Non-Resident Person for tax purposes. However, if a foreign company is incorporated abroad but effectively managed and controlled from the UAE, both the parent company and its UAE branches will be treated as Resident Persons under the UAE Corporate Tax Law and as UAE Tax Residents. ## Tax Residency Status of Exempt Persons The tax residency classification of Exempt Persons depends on the category into which they fall. ### Category 1: Automatically Exempt Persons This category includes Government Entities. If a Government Entity carries out non-exempt business activities, those activities are treated as separate businesses and are subject to Corporate Tax. Because a Government Entity is established in the UAE, it is considered a Tax Resident by default. ### Category 2: Exempt Upon Notification and Meeting Conditions This category applies to entities involved in Extractive Business or Non-Extractive Natural Resource Business. Any operations that do not fall within the exempt activity are treated as independent businesses and may be subject to Corporate Tax. Since these entities are incorporated or recognized in the UAE, they are considered Tax Residents. ### Category 3: Exempt by Inclusion in a Cabinet Decision Government-Controlled Entities and Qualifying Public Benefit Entities fall under this category. If they meet the required conditions and are incorporated or legally recognized in the UAE, they are considered Tax Residents. ### Category 4: Exempt Upon FTA Approval This category includes: - Public and private pension and social security funds - Qualifying Investment Funds - UAE-incorporated juridical persons wholly owned and controlled by certain Exempt Persons These entities are either formed or recognized in the UAE and are therefore treated as Tax Residents. ## Tax Residency of Natural Persons in the UAE Under Article 4 of Cabinet Decision No. 85 of 2022, a natural person qualifies as a UAE Tax Resident if they meet at least one of the following conditions. ### 1. Physical Presence for 183 Days or More The individual has been physically present in the UAE for at least 183 days within any 12-month period. ### 2. Physical Presence for 90 Days or More with Additional Criteria The individual has been physically present in the UAE for at least 90 days within a 12-month period, and: - They are a UAE or GCC national, or they hold a valid UAE Residence Permit; and - They either have a Permanent Place of Residence in the UAE or conduct employment or business activities in the UAE. ### 3. Primary Place of Residence and Financial Ties The individual’s main place of residence, financial interests, and personal interests are centered in the UAE. ## Conclusion Determining tax residency in the UAE is a critical compliance matter for both individuals and juridical persons. Tax residency status depends on factors such as physical presence, place of residence, financial and personal ties, incorporation, business operations, and effective management and control. A Tax Residency Certificate issued by the FTA serves as proof of tax residency, but it does not automatically create Corporate Tax liability. Corporate Tax applies only where the person also qualifies as a Taxable Person under the UAE Corporate Tax Law. ## How BCL Globiz Can Help Navigating UAE tax residency rules requires a clear understanding of the applicable laws and compliance requirements. BCL Globiz provides guidance on tax residency assessments, Tax Residency Certificate application procedures, and Corporate Tax obligations. The team supports businesses and individuals with tax structuring, regulatory compliance, and Corporate Tax planning to help them remain compliant with UAE tax laws while managing their tax position effectively.