Eternity Law International — News — Tax Residency in the UAE in 2025: What You Really Need to Know

Tax Residency in the UAE in 2025: What You Really Need to Know

Published:
April 18, 2025

Given the rapid growth of the UAE as a global hub for business, finance, and innovation, the views held by the country towards taxes are changing. Tax residency is one major area emerging within the 2025 flock-exactly the concern that affects any entrepreneur, freelancer, or in any instance, a company seeking a willing base in the world.

This guide examines the present meaning of tax residency in the UAE, how the rules operate, what new additions are being brought in, and what these additions mean for you or your company.

Tax Residency: What Does It Even Mean?

A tax residency basically means the state that considers you as local for tax purposes. It is comprised of where taxes are paid or, conversely, not paid following the local rules. Depending on whether you are living and working on either side of the border, the choice of the right country to be a ‘resident’ in can make a huge financial difference.

For many, the UAE is attractive because of tax advantages. However, the laws regarding who legitimately qualifies as a resident have tightened, and you will be required to prove that you truly reside and work there.

How Taxes Work in the UAE (as of 2025)

The UAE has long had a reputation as a low-tax—or even no-tax—destination. That’s still mostly true, but there are some new developments to know about:

  • Corporate Tax: Since 2023, there’s now a 9% tax on business profits over AED 375,000.
  • VAT: A 5% Value Added Tax applies to most goods and services.
  • No Income Tax for Individuals: That’s still the case.
  • Economic Substance Rules (ESR): These make sure companies are genuinely active in the UAE—not just on paper.
  • Double Tax Agreements (DTAs): Over 130 agreements in place to help people and companies avoid paying tax twice.

So yeah, being a tax resident here can give you access to these benefits—but only if you really qualify.

Big News: New Tax Laws Effective 2023

Tax Residence Definitions were established in the United Arab Emirates by Decision No. 85 of 2022, which the Cabinet had put forward in March of the very year under discussion. This definition continues to serve the basis on which the authorities will issue Tax Residency Certificates (TRCs) for individuals in 2025 from tax residency purposes. The breakdown is provided here:

An individual shall be deemed a resident of the UAE for tax purposes if any of the following apply to him, as in:

  • An individual who, over any 12 months, spends or has spent 183 days or more in the UAE.
  • A person is a tax resident if that person resides or spends at least 90 days in the UAE and has a home there that they are at least meaningfully living in, and/or works or conducts business activities in the UAE.
  • Any person who is very typically a UAE national or GCC citizen would be regarded as a tax resident if that person exists or spends a considerable portion of life in the UAE formulating family attachments, doing business, or having financial ties.
  • The authorities would further consider where you have established your personal and financial interests-simply put, where does your life happen?
  • For companies a company becomes a tax resident in the United Arab Emirates if: It was established under UAE-law; or The company is being managed and controlled from within the UAE; the key controlling decision-makers operate from here.
  • That second half carries quite a punch, particularly concerning foreign companies that have a UAE branch or operations.

Why Should You Care?

Getting recognized as a UAE tax resident gives you several big advantages:

  • Access to UAE’s Tax Treaties: Avoid paying taxes in two countries on the same income.
  • Stay Off the Radar Elsewhere: Your home country can’t tax you if you’re not their resident anymore.
  • Better for Enterprise: You can lower your total tax bill legally.
  • Smoother Banking: Banks often ask for TRCs to open or maintain accounts.

In short, it can save you money, stress, and a lot of paperwork—if you do it right.

The Tax Residency Certificate (TRC): Your Key Document

Once you qualify as a resident, you can apply for a Tax Residency Certificate from the Ministry of Finance. This paper proves your status and lets you access treaty benefits.

What Individuals Must:

  • Passport and UAE residence visa
  • Emirates ID
  • Proof of your UAE address (like a rental contract)
  • Bank statements showing local activity
  • Immigration report showing how many days you stayed in the country

What Businesses Need:

  • Trade license and incorporation docs
  • Office lease
  • Bank account and information
  • Audited financials
  • Evidence of real business activity

Expect the process to take around a month. Certificates are valid for one year.

What About Remote Workers and Freelancers?

The UAE’s been actively attracting digital nomads and remote workers with special long-term visas. But here’s the catch: just having a visa doesn’t make you a tax subject.

To qualify, you still need to hit the 183-day or 90-day rule and show that your life is based here. That means:

  • Living here most of the time
  • Spending locally
  • Opening local bank accounts
  • Having a UAE address you actually stay at

It’s not impossible—but you need to be intentional about building a presence.

Common Myths You Should Ignore

Let’s clear up a few wrong assumptions:

  • “I have a visa, so I’m good.”
    Nope. The visa helps, but it’s not the full story.
  • “UAE doesn’t tax anyone, so I don’t need to think about this.”
    Wrong. You might still owe taxes elsewhere if you’re not officially a UAE resident.
  • “I’ll just set up a company and claim residency.”
    That’s old-school thinking. The UAE wants real operations—not ghost companies.

Watch Out for These Mistakes

Trying to fake or shortcut residency can backfire. Be cautious if:

  • You barely spend any time in the UAE
  • Your money flows mostly through foreign banks
  • Your company exists only on paper
  • You can’t provide audited accounts or a real address
  • You try to claim residency in multiple countries

Tax authorities worldwide are sharing more data now. If your story doesn’t add up, they’ll notice.

How to Lock in UAE Tax Residency in 2025

Want to do this right? Here’s a simple action plan.

For Individuals:

  1. Track your time: Keep a record of how many days you spend in the UAE.
  2. Get a real address: Sign a lease, get your name on the bills.
  3. Open local bank accounts: Use them regularly.
  4. Work or run a business: You’ll need documentation.
  5. Apply for your TRC after 6–12 months of clear activity.

For Companies:

  1. Incorporate properly—no shortcuts.
  2. Set up a real office, not just a virtual desk.
  3. Run operations: Hire, sell, provide services.
  4. Get audited: Have clean, clear financials.
  5. Reapply for your TRC each year.

What’s Next? Global Trends & UAE’s Role

In 2025, the global tax world is becoming more aligned, fair, and transparent. Countries are cracking down on aggressive tax avoidance. The UAE is playing along—not by raising taxes, but by raising standards.

This helps filter out people just looking for loopholes and keeps things attractive for serious players.

If you’re legit about living or doing business in the UAE, you’ll benefit from a stable, low-tax system that actually holds up internationally.

Final Thoughts

Tax residency in the UAE is no longer something you can fake or buy. The process is now regulated, structured, and monitored.

The good news? If you’re actually based in the UAE, it’s still one of the most tax-friendly places on the planet. No income tax. Business-friendly policies. Incredible infrastructure. Global access.

But you’ve got to follow the rules, live the life, and prove you’re really here.

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