Tax Residency for Australian Expats In The UAE – The United Arab Emirates government has recently issued a resolution that will determine tax residency for natural and legal persons for the first time and is due to come into force on 1 March 2023.
Up until recently there was no statutory definition and Australian expats who are resident of the UAE relied upon the availability of an annual lease agreement (including Ejari, where applicable), and a minimum of 180 days of residence in the UAE.
Under the resolution, a legal person (entity or establishment) is tax resident in the UAE if the entity:
- Was established, formed, or registered in accordance with the UAE laws, with the exception of branches of foreign legal persons; or
- Is treated as a tax resident under the applicable UAE tax law. The imminent Federal corporate income tax legislation should feature further details on this condition.
Article 4 of the Resolution defines natural persons (individuals) as tax residents in the UAE if one of the following conditions is met:
- The individual’s usual or principal place of residence is in the UAE and the centre of their financial and personal interests are in the UAE or other conditions prescribed by the minister; or
- The individual has been physically present in the UAE for a period of 183 days or more in a 12-month period; or
- The individual has been physically present in the UAE for a period of 90 days or more over a 12-month period and is a UAE citizen, UAE resident, or GCC national who either has a permanent place of residence in the UAE; or carries out a job or business in the UAE.
Where a person is considered a tax resident under either of the definitions outlined above, they may apply to the Federal Tax Authority (FTA) to obtain a Tax Residency Certificate (TRC), which is often a formal requirement for UAE residents wishing to claim benefits under the relevant tax treaty or other forms of tax relief (outside the UAE).
The FTA will approve the application and issue a TRC where it is satisfied the applicant meets the relevant conditions.
With over 16,000 Australian expats living in the UAE this announcement is a positive step in their ability to qualify their election as a non-resident for tax purposes in Australia.