UAE unveils tax residency criteria

[backpacker]

I think it's better to spend out money in Dubai restaurants and hotels rather pay tax.
Even in home countries especially if they are western countries life is not cheap and restaurants are not free.
So still even if you overspend you can have life with less headache. Even if we talk income around 100k/year

Sorry, but with the annual income you mention ($100k/year) there are much more attractive options available.
Just structure correctly, have a good tax advisor and -considering $100k/year- you can live with a reasonable tax burden in almost every Western country.

 

[TheCryptoAnt]

ok but what if

you dont pay yourself no salary/dividends, and just pay everything using the company account.
Do these acc get reported too? FZCO bank acc I mean.

FZCO is incorporated in UAE obvs, + EID + Ejari/PO Box

 

[Skenners]

ok but what if

you dont pay yourself no salary/dividends, and just pay everything using the company account.
Do these acc get reported too? FZCO bank acc I mean.

FZCO is incorporated in UAE obvs, + EID + Ejari/PO Box

Isnt that subjected to substance in the company?

I thought about doing the same thing, but Im told that the company would be subjected to substance testing and if it didnt meet the criteria of an actual company, that I'd be taxed as personal income (love you, Australia.. ugh..)

Is there a way around it using fzco?

-Skenners

 

[Konstanz]

ok but what if

you dont pay yourself no salary/dividends, and just pay everything using the company account.
Do these acc get reported too? FZCO bank acc I mean.

FZCO is incorporated in UAE obvs, + EID + Ejari/PO Box

Yes, if you are director/ubo you will be reported

 

[TheCryptoAnt]

Isnt that subjected to substance in the company?

I thought about doing the same thing, but Im told that the company would be subjected to substance testing and if it didnt meet the criteria of an actual company, that I'd be taxed as personal income (love you, Australia.. ugh..)

Is there a way around it using fzco?

-Skenners

what if we buy a few flats and rent them? Very local and substance rich.

Yes, if you are director/ubo you will be reported

mmm, rather what I just said or nominee?
can you even use nominees in Dubai? dunno

or live 90 days in Dubai and get the damn paper ofc

 

[Skenners]

what if we buy a few flats and rent them? Very local and substance rich.

if you've got the money for it! Im told that substance is more or less just having a physical office, a secretary/receptionist and signage/letterheads, etc. One other guy on here said that he was only spending just under 2k euros per month on substance.

-Skenners

 

[TheCryptoAnt]

if you've got the money for it! Im told that substance is more or less just having a physical office, a secretary/receptionist and signage/letterheads, etc. One other guy on here said that he was only spending just under 2k euros per month on substance.

-Skenners

this sounds cheaper than my original idea.

@Fred what do you think?

EDIT to add: CBI passports are starting to make a lot of sense to me now.

 

[Fred]

You are tax resident if you stay 90 days + hold a residence permit + have a permanent place of residence + have a business (or are employed)

Nice and clear rules.

Basically everything what we provide our clients here since almost 3 years with our All-Incl. Package.

I think it's better to spend out money in Dubai restaurants and hotels rather pay tax.
Even in home countries especially if they are western countries life is not cheap and restaurants are not free.
So still even if you overspend you can have life with less headache. Even if we talk income around 100k/year

Word. Don't forget about the bureaucracy in all EU countries - the time you waster in EU on Accounting and the money you waste on Tax can be used for lifestyle when moving to Dubai - more time and money to enjoy life.

ok but what if

you dont pay yourself no salary/dividends, and just pay everything using the company account.
Do these acc get reported too? FZCO bank acc I mean.

FZCO is incorporated in UAE obvs, + EID + Ejari/PO Box

When the FZCO is setup with Office, UBO has Residence Visa, EID and a Personal Address Proof - a local UAE Phone no -> it's a 100% Residence Case in the UAE and NO CRS reporting is triggered.

This by the way is the same like a German Citizen is moving to let's say Denmark - when he has his job there, personal address, local phone no and a Residence with ID card - the Danish Bank doesn't report either under CRS because they don't have any obligation to do so.

The only difference in this example is that UAE has 0% tax and is a non-EU country.

this sounds cheaper than my original idea.

@Fred what do you think?

EDIT to add: CBI passports are starting to make a lot of sense to me now.

Need to see the bigger picture and your circumstances.

CBI passport in the sense you referring to makes only sense when the story makes sens - easy example:

German Guy should go for a Turkish Passport as Birth Place is mentioned as Almanya while you can change your name to a typical Turkish Name and half Turkey is or was at some point living in Germany so the whole story makes sense - Turkish Passport, Turkish Name and born in Almanya - but never had the German Passport and the new Turkish Passport doesn't have the old permanent Residence in Germany on it


So when the plan is worked out - same like for Foundations and other stuff we get asked frequently - you just need to have couple of millions $ to justify such setups / strcutures

But please don't be the guy wasting 150k$ on a CBI passport when it's ovious it's a CBI passport as this fails the whole purpose unless you are US Citizen or from a 3rd World Country.

 

[Nomade]

What is the risk of this new 3 month tax residency changing back to 6 months in the medium or long term? Was the 3 months under discussion for many years? Because if not, and it developed, got approved, and implemented in a short period of time, while a positive development, wouldn't there be a significant risk that one structures everything with this 3 month tax residency in mind, then it gets reversed in a negative development, and just as quickly, too? @Fred or others, what do you think?

 

[Konstanz]

I think 3 months is kind of international standard. I don't think this would change any time
But for tax residence certificate you also have to have annual rent or own property, have water/electricity utility bill , bank account

 

[Nomade]

Is it really an international standard? For tax residence some places are 1 month some are 6, some are even more or less, it seems to vary a lot. Yes I know about the property bill and bank, those have nothing to do with physical presence though. If someone wants to build a long-term plan around spending 3 months in a place and suddenly has to spend 6, that's a great difference. So, what is the risk, how could someone be confident, or is it just a gamble?

 

[mcminder]

Hi everyone!

Have a question regarding the new tax residency requirements, based on the new requirements they posted in November:

A natural person will be considered a UAE Tax Resident if the individual:
  ● has their usual or primary place of residence and their centre of financial and personal interests in the UAE;
  ● was physically present in the UAE for a period of 183 days or more during a consecutive 12-month period;
  ● was physically present in the UAE for a period of 90 days or more in a consecutive 12-month period and the individual is a UAE national, holds a valid residence permit in the UAE or holds the nationality of any GCC Member State, where:
    (i) he or she has a permanent place of residence in the UAE; or
    (ii) he or she carries on an employment or a business in the UAE.

What requirements would I have to meet if I'll be an employee for a Dubai company, but available to remote work up to 100% of the time?
So, I would like to have the tax certificate but also be as less as possible in Dubai.

I would expect to have to meet (underlined):
● was physically present in the UAE for a period of 90 days or more in a consecutive 12-month period and the individual is a UAE national, holds a valid residence permit in the UAE or holds the nationality of any GCC Member State, where:
(i) he or she has a permanent place of residence in the UAE; or
(ii) he or she carries on an employment or a business in the UAE.[/CODE]

Would it be enough to spend 90 days in the UAE? I'll probably do 2 months 1st semester and another 2 months in 2nd semester.
I will have a valid residence permit due to my job in Dubai, and will keep the residence active by visiting at least every 6 months.
As I would be interested in staying for as close to 90 days as possible in Dubai, I won't expect to have a tenancy contract for the full year or a Ejari, as most rentals are for 1 year periods.

But when i go and start the Tax Certificate request, it asks for the Ejari or Utility Bills (which I don't think I'll have on short-term rentals) and:

A report from the General Directorate of Residency and Foreigners Affairs or Federal Authority for Identity and Citizenship (ICA) specifying the number of days the resident has stayed in the UAE (The applicant must have been a resident of the UAE for at least 180 days).

(extract from the Applicant Manual, which is from 2021, so the Web may not be updated to meet the new passed law)

So, can anyone shed any light?
Does the web still need to be revised to request the certificates according to the new law?
Do we have to be always be there at least for 183 days? (Then why say 90 days on some conditions???)
Is the Ejari (or utility bills) required if I'm staying for just 90 days, and doesn't seem to be a requirement based on the above-underlined conditions?

Thanks all! A bit long of a post, but tried to be as clear as possible and link as many sources as possible.

I just saw that the passed law will take effect on March 1st, so it makes sense for the webpage not to be enabled to issue tax certificates based on the new rules.

So, basically, my question now comes down to just this:

What requirements would I have to meet if I'll be an employee for a Dubai company, but available to remote work up to 100% of the time?
So, I would like to have the tax certificate but also be as less as possible in Dubai.

I would expect to have to meet (underlined):
● was physically present in the UAE for a period of 90 days or more in a consecutive 12-month period and the individual is a UAE national, holds a valid residence permit in the UAE or holds the nationality of any GCC Member State, where:
(i) he or she has a permanent place of residence in the UAE; or
(ii) he or she carries on an employment or a business in the UAE.

Would this look fine?

 

[MiddleEuroAsia]

Would it be enough to spend 90 days in the UAE?

Correct.

Is the Ejari (or utility bills) required if I'm staying for just 90 days, and doesn't seem to be a requirement based on the above-underlined conditions?

It's not required, but it's preferred. Otherwise, get ready for a lengthy and expensive process to get that TC.

 

[zzzzzz]

I think 3 months is kind of international standard. I don't think this would change any time
But for tax residence certificate you also have to have annual rent or own property, have water/electricity utility bill , bank account

And a DTA between your home country and UAE, where UAE residents are also mentioned, not just UAE nationals. Without that you cannot get TRC!

 

[mcminder]

Correct.

It's not required, but it's preferred. Otherwise, get ready for a lengthy and expensive process to get that TC.

Hi @MiddleEuroAsia , thanks for answering!

Would you mind giving a bit more details?
Did you had any similar experience?
How much more expensive and lengthy?
Do they request additional documentation?
As before it looked like a requirement, but with the new changes seems more optional.

Is it easy to have an Ejari contract for short term duration (2-6 months)?
Would the Ejari/tenancy contract need to be active at the moment of requesting the TC or would it be enough to have had it during the year?

Else, I would do a tenancy contract for full year and early cancel it paying the agreed penalty.
But can I request a TC for the current year once I comply with the requirements or I need to wait for next year and request it providing docs from the past year?

Soooo many questions

 

[ferchina]

And a DTA between your home country and UAE, where UAE residents are also mentioned, not just UAE nationals. Without that you cannot get TRC!

Most of the European DTAs do not include the term "uae resident" only "uae national"

 

[zzzzzz]

Most of the European DTAs do not include the term "uae resident" only "uae national"

And that's a big problem. I know a person from EU who wanted to get TRC and taxman said (in UAE and in home country) - not possible to get TRC as DTA is written for UAE nationals only!

 

[mcminder]

And that's a big problem. I know a person from EU who wanted to get TRC and taxman said (in UAE and in home country) - not possible to get TRC as DTA is written for UAE nationals only!

But the DTA would only be really useful if you are getting any type of income, dividends... from your home country (for example) and you want to use the TRC to use the DTA to exempt that income from your home country and be taxed by your new country rules.

In my case I just want the TRC as a "get out of jail" card in case my home country tries to investigate me, even when I complied with all the requirements for not being a resident in there.
Would be useful even if there's no DTA due to not being a UAE national.

I saw there's an option to request a TRC for "General" purposes in the process, it indicates it's only useful for UAE government and/or airlines?
But in this case seems they would create one, as they can't say there's no DTA there?
And for evidence purposes in case of investigation of your home country, something (even if not perfect) is better than nothing.

 

[zzzzzz]

But the DTA would only be really useful if you are getting any type of income, dividends... from your home country (for example) and you want to use the TRC to use the DTA to exempt that income from your home country and be taxed by your new country rules.

In my case I just want the TRC as a "get out of jail" card in case my home country tries to investigate me, even when I complied with all the requirements for not being a resident in there.
Would be useful even if there's no DTA due to not being a UAE national.

I saw there's an option to request a TRC for "General" purposes in the process, it indicates it's only useful for UAE government and/or airlines?
But in this case seems they would create one, as they can't say there's no DTA there?
And for evidence purposes in case of investigation of your home country, something (even if not perfect) is better than nothing.

When you request TRC on FTA website in UAE, you can see if TRC can be issued for your country or not. If not, there is nothing you can do.

 

[mcminder]

When you request TRC on FTA website in UAE, you can see if TRC can be issued for your country or not. If not, there is nothing you can do.

In my case it exist, although I won't be able to use to avoid "double taxation", as my country has the "UAE national" thing in the DTA.

But, there's a country called "General", which seems you can use to request it, so it may be useful in some cases where you just care about the TRC and not going to use it to avoid any taxation generated in your home country.