Tax residency of company or individual is an important aspect for calculation of taxes and to enjoy the benefit of agreements for avoidance of double taxation. In order to determine tax residency of the company the following international criteria are employed:
- Tax residency for legal entities is determined subject to the place of registration and management of business. In cases of uncertainty of effective management, the decision is made by relevant authorities subject to mutual agreement of countries authorities.
When determining tax residency of the company in the UAE it is important to take into account its status, availability of business premises and management in the UAE.
For individuals in terms of tax residency the following rules shall apply:
- First, the place of residency and the center of vital interests is to be determined.
- Furthermore, regulations related to taxes and identification of tax residency of the country from which the individual arrived to Dubai, UAE shall be taken into account.
- In cases where it is impossible to determine residency subject to the aforesaid aspects, the decision shall be made by relevant authorities pursuant to mutual agreement.
It should be noted that determination of tax residency of companies and individuals is complex and multicomponent task, requiring knowledge of the laws of the UAE and the laws of the country where tax benefits are intended to be enjoyed due to tax residency in Dubai, UAE.
