UAE Residents taking up Tax Residence in Malta

Onerous UAE tax residency criteria implemented

Dr. Priscilla Mifsud Parker co-authored with Dr. Anna Sultana | Published on 07 Mar 2023

default bannerv3

Until the year 2022, the United Arab Emirates (UAE) applied a very light legal requirement for UAE tax residency. A UAE tax ‘resident’ person in the Emirates meant any United Arab Emirates National or an individual who is a resident in United Arab Emirates with a valid Emirates ID and a valid Residency Visa.

UAE Tax Residency

This tax residence framework, compared to other jurisdictions’ requirements, proved to be very wide and slightly ambiguous. These loose criteria, together with the traditional tax-free environment, offered both its citizens and the expatriate community, have been a key factor in attracting foreign investment and skilled professionals to the country. The absence of a tax regime has been a major selling point for the UAE.

The introduction of onerous minimum presence rules (183 days) to prove tax residence in the United Arab Emirates are seeing UAE residents jilted by yet another tax change in the Emirates take up residence in the European Island of Malta where tax is only chargeable on a remittance basis and foreign source income and capital gains are outside the scope of Maltese taxation. Dr Priscilla Mifsud-Parker

Over recent years, the Emirates have increased their focus on compliance with international tax standards, and hence, have recognized the need to update its tax laws. 

Tax Residence Certificate Applications in the UAE pre-2023

Individuals having several presences in different jurisdictions may require a tax residence certificate as proof of one’s tax residency status in a particular country. This certificate is issued by the state’s official tax authorities and is usually requested by other tax authorities to prove that tax has been paid in one jurisdiction, for the purposes of applying a bilateral double tax treaty. 

In the UAE, the applicable rules and requirements to obtain a tax residence certificate were not based on the idea of establishing and proving physical presence in the country, therefore supporting documents evidencing one’s presence . To apply, one required the following supporting document in connection with the presence in the UAE:

  • Documentation from the General Directorate of Residency and Foreigners Affairs detailing the number of days one has been resident in the UAE.

Tax Residence Criteria in the UAE today 

Through the Cabinet Decision No. 85 of 2022, the UAE Government revised and amended the criteria to determine what constitutes a tax resident in the UAE. As this amendment added more requirements, one could say that it has restricted how one can identify as a tax resident of UAE. It has shifted its criteria from broad and vague to a more specific framework, aligned with other tax systems.

This decision was taken in September of 2022, with the aim of it taking effect from March 1st, 2023. 

Article 4 of the resolution sets the basis for determining who qualifies as a tax resident of the UAE. It stipulates that a natural person will be considered a tax resident if they fulfil any of the following conditions:

  • The UAE is the primary place of residence and have the financial and personal interests centred there or
  • Physical presence of at least 183 days during a consecutive 12-month period in the UAE or
  • They are either a UAE national, hold a valid UAE residence permit or are a GCC national and they have been physically present in the UAE for a minimum of 90 days during a consecutive 12-month period, and they are either a UAE national, hold a valid UAE residence permit, or are a GCC national. In addition to this, they must also have permanent residence in the country and/or be employed or

Hence, whilst the UAE has now become more in sync with other developed jurisdictions, it has also restricted its basis for an individual to be considered as tax resident. 

Tax Residence Certificate Applications in the UAE 2023

Before 2020, applications for the Tax Residence Certificate used to be submitted to the UAE Minister of Finance, however now they are submitted to the Federal Tax Authority. 

Furthermore, following the introduction of the concept of tax residency in the UAE, the requirements for a Tax Residence Certificate were also slightly amended. 

Previously, individuals who wanted to apply for a tax residence certificate were required to submit documentation from the general directorate that provided information on the number of days they had spent in the country. However, under the new rules introduced by Cabinet Decision No. 85 of 2022, applicants must now demonstrate that they have been physically present in the UAE for a minimum of 183 days during the relevant tax year.

Request More Information
Please send me legal and other updates

Key Contacts

Dr Priscilla Mifsud Parker

Advocate, Tax Consultant, Licenced Agent, Malta

+356 22056422

Related Practice Groups