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“The new decision simply aims to avoid double taxation,” said Mostafa Hegab, Legal Counsel at Mansoor Lootah Advocates and Legal Consultants. “The new cabinet decision has listed some requirements based on which any natural person or legal entity could be characterised as a tax resident in the UAE. Accordingly, a tax residency certificate will be issued, which can be provided back to the birthplace in order to avoid double taxation.'
Cabinet decision No.85 was issued in 2022, and came in to force on March 1, 2023, in to illustrate the requirements and conditions for identifying a person or legal entity as a tax resident in the state.
In doing so, they aligned the definition of domestic Tax Resident with internationally recognised standards, according to Arun Leslie John, Chief Market Analyst, Century Financial. “The newly introduced criterion will make it easier for individuals and entities to have absolute clarity about their tax residency position within the country,” he said. “This is important because the UAE is home to individuals from across the world.”