The benefits of obtaining tax residency in the UAE

People migrate to new countries for a multitude of reasons: better career prospects, improved safety and security, education opportunities, financial incentives and a more favourable climate are just a few of them.

There are currently over 56.8 million expatriates living around the world and this number is expected to continue growing.

The prospect of better business opportunities, fewer taxes and the chance to live a better life have made the desire to migrate stronger than ever.

Global events such as Covid-19, the conflict in Ukraine and Brexit have underlined the uncertainty that we live with these days and the need to be able to adapt in order to overcome these obstacles. Many countries such as the UAE have been quick to respond and have introduced golden visas and other residency and investment initiatives in a bid to attract foreign investment and boost their economies.

The UAE’s is one of many “Golden Visa” programmes around the world which offer residency and a tax-reduced life in return for financial investment, property acquisition or business investment.

The UAE’s residency programmes have helped the country’s economy benefit from an influx of foreign capital and for the recipients of the visas, they can be an amazing tax savings tool. However, if you want to obtain tax residency in the UAE and benefit from the country’s tax landscape, it’s important that you also free yourself from your tax obligations in your home country.

What is tax residency and how is it determined?

Your tax residence is the country in which you are legally obliged to pay personal income tax, and for the vast majority of people, their tax residence is the same as their home country. However, once you start spending time in other countries, it is quite possible to change your tax residency.

Most countries follow a 183-day rule whereby if you spend less than this time in the country, you’ll no longer be considered a tax resident. However, there are exceptions to this rule, so it’s important to first find out the requirements in your home country before you can begin to enjoy the reduced taxes or in some cases completely tax-free lifestyle that the UAE offers.

How to obtain tax residency in the UAE

To be considered a tax resident in the UAE, you must meet one of the following criteria:

• Your main place of residence is the UAE, and your primary financial and personal interests are in the country.

• You are physically present in the country for a period of 183 days or more in a consecutive 12-month period.

• You are physically present in the UAE for a period of at least 90 days in a consecutive 12-month period and you are a UAE citizen or resident with permanent residence or a business in the UAE.

How do you get a UAE residence visa?

Thanks to the number of new residence initiatives launched over the last few years. There are now numerous ways to obtain residency. This can include investment in a property, setting up a business or even having a skill or talent in an area that is in high demand in the country such as technology, engineering, medicine, science or business.

The UAE Golden Visa

The UAE Golden Visa has attracted significant interest since its launch in 2018 and has undergone several amendments since then which have relaxed the conditions for eligibility and opened it up to a much wider target audience.

The visa is issued for a period of 10 years with the option to renew indefinitely as long as the requirements attached to it continue to be met. It also allows for sponsorship of family members and even lets the holder stay outside the country for more than the usual 6 month period whilst retaining its validity.

You can qualify for it by investing in a property in the UAE of at least AED 2 million, as an entrepreneur with a UAE business valued at AED 500,000 or more or having a specialised talent in areas such as medicine, science, engineering or sport.

The visa costs between AED 2,800 and AED 4,800 to obtain depending on the category in which you’re applying or whether you currently reside inside or outside the UAE.

One of the main advantages of the golden visa is that it allows foreign nationals to obtain residency without the usual requirement of a UAE sponsor which was previously a requirement of residency for foreign nationals.

The Green Visa

This is similar to the golden visa but with more relaxed eligibility requirements and as such it’s only issued for 5 years instead of the 10 offered with the golden visa.

It’s open to freelancers and the self-employed with proof of income for the previous 2 years of at least AED 360,000 or proof of financial solvency throughout their stay in the country. It’s also available to skilled employees with a bachelor’s degree or equivalent qualification and a salary of at least AED 15,000 per month.

Employment Visa

This is the traditional way and how most people obtain residency in the UAE. It requires a hiring company to sponsor your stay in the country and is usually valid for between 1 and three years depending on the employment contract. The holder must be making a salary of at least AED 4,000 or AED 3,000 plus accommodation expenses.

Real Estate Visa

The real estate visa allows its holder to sponsor themselves and their dependents and requires the purchase of a property in the UAE with a value of at least AED 1 million which must be completed at the time of purchase.

Retirement Visa

Anyone living outside the UAE or anyone currently in the UAE who has reached the age of 55 can apply for the retirement visa. It’s valid for 5 years, is renewable and can be obtained by meeting any of the following criteria:

• Invest in a UAE property with a value of at least AED 2 million

• Have financial savings of at least AED 1 million

• Have an active income of no less than AED 20,000 per month

Student Visa

This visa is open to anyone of 18 years and older who enrolls in a college or university in Dubai. The visa can be sponsored by the parents (only male students) or by the university itself.

It is usually valid for one year but can be extended upon submission of proof of continuation of studies.

Exceptional graduates who have achieved a Grade Point Average (GPA) of at least 3.75 are also eligible for a 5-year Golden Visa to enable them to stay in the UAE and pursue a career in the country.

How to obtain a tax residency certificate (TRC)

It may be necessary, under some circumstances for an individual or business to be able to prove tax residency in the UAE. To be able to do this a UAE tax residency certificate (TRC) must be obtained. The document is issued by the Federal Tax Authority (FTA) and is available to any UAE resident as an individual or any UAE business operating on the mainland or in one of the country’s free trade zones.

The main requirement is that the individual has resided in the UAE for at least 180 days and has a valid residence visa. It can be obtained via an online application to the FTA and is usually issued within 10 working days. As proof of having resided in the UAE for the required period, it is common when applying for a tax residency certificate for an entry/exit report to be obtained from Immigration. The certificate can be renewed each year assuming all the requirements continue to be met. More on how the process of obtaining a tax residency visa read here.

The tax residency certificate is particularly important for anyone whose home country does not have a double taxation agreement with the UAE, since this will help avoid the risk of being taxed twice on the same source of income.

PRO Partner Group can help you through all stages in the process to obtain and maintain a UAE tax residency certificate (TRC) – please contact a member of the team for further information.

Final Thoughts

The UAE’s efforts to attract foreign investment and willingness to introduce new legal reforms that support that goal mean that it’s easier than ever for foreigners to obtain long-term residency. Changing your residency away from those high tax jurisdictions and determining the residency programme that suits your circumstances best are the first steps towards enjoying the reduced tax or in some cases, tax-free lifestyle that the UAE offers.

How can PRO Partner Group help?

The process of obtaining residency in the UAE and understanding the implications it has for your tax obligations can be challenging and time consuming. Having a professional corporate services company on your side can simplify and speed up the process significantly.

PRO Partner Group (PPG) have expert knowledge of the UAE and direct access to government departments. We can advise you on the best way for you to obtain UAE residency and a tax residency certificate.

If you need assistance with this or with any other related company setup, restructuring, local partner or Visa and PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar, Bahrain and Saudi Arabia then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at info@propartnergroup.com or complete the contact form below and we will be delighted to assist you.