At the beginning of 2023, new UAE tax laws were introduced, easing the eligibility requirements for becoming a UAE tax resident. With leaner requirements, these new UAE tax laws could be exactly what digital nomads need.
It’s no secret that the digital nomad lifestyle is a complicated one when it comes to paying taxes. With such a diversified lifestyle living in multiple countries during the year while earning income from outside of those countries, knowing where you’re a tax resident is complex.
These new UAE tax laws can make it easier for digital nomads to find a favorable tax residence without committing to living in the country for 183 days of the year.
The UAE is already known for offering favorable tax rates to both individuals and companies with tax residency in the country. So, for tax-savvy digital nomads, these new UAE tax laws could save them thousands of dollars a year in income or corporate taxes.
New UAE Tax Residency Laws
Before the new UAE tax laws were introduced, it was a bit complicated to become a tax resident in this thriving Middle Eastern country. Many digital nomads had to spend at least 183 days out of the year there or have a company based in Dubai.
These new UAE tax laws allow tax residents to spend less time in the UAE and still be considered a tax resident.
The UAE’s Federal Tax Authority introduced Cabinet Decision No. 85 in September of 2022. However, the new UAE tax laws didn’t go into effect until March 1, 2023.
How to Become a UAE Tax Resident
These new UAE tax laws make it easier to become a UAE tax resident, decreasing the time commitment for individuals to stay in the country.
Below are the three situations of UAE tax residency explained.
Primary Place of Residence in the UAE
Individuals who have their primary place of residence in the UAE and strong ties to the country will be considered tax residents regardless of how many days they are present in the country.
This means that if you own a house in the UAE and you use it as your principal residence, you can take advantage of the favorable tax rates.
Physical Presence in the UAE for 183 Days
While the new UAE tax laws offer tax residency for fewer days, there is still an option to gain it if you are physically present in the country for 183 days out of the year.
These 183 days must be within a consecutive 12 months.
Physical Presence in the UAE for 90 Days with a Residence Permit or Business Ties
This is the new resolution that can be extremely beneficial for digital nomads. If you have residence in the UAE, for example, with the Dubai digital nomad visa, you only need to spend 90 days in the country to be considered a tax resident.
Other eligibility criteria for those staying 90 days in a consecutive 12-month period in the UAE include:
- UAE Resident
- UAE Citizen
- Citizens of the Gulf Cooperation Council (GCC) who has a permanent place of residence or conducts business in the UAE
If you can devote at least three months out of the year to living in the UAE as a digital nomad, then you could be subjected to 0% personal income tax with these new tax resident requirements.
UAE Tax Rates
In most cases, explaining a country’s taxes is messy and complicated. Fortunately, the UAE has such straightforward tax laws that it can be easy to sum up in just a couple of sentences.
UAE Tax Rates for Individuals
The personal income tax rate in the UAE is 0%.
There are also no wealth, inheritance, capital gains, interest, luxury, or dividend taxes as a UAE tax resident.
However, foreigners are subjected to paying tourist taxes, such as at hotels, on services, and municipal taxes.
UAE Tax Rates for Companies
The new UAE tax laws impose a 9% tax rate for companies earning more than AED 375,000, or $102,000 USD, per year starting June 1, 2023.
Until then, companies have a tax rate of 0%.
Of course, there are additional tax rates based on the type of company and what they manufacture. For example, there is a 100% tax on tobacco products and energy drinks.
We won’t do a deep dive into the corporate tax system in the UAE, but you can read more about them on the official FTA website.
How to Get a UAE Tax Resident Certificate
To become a UAE tax resident, you must register for a tax resident certificate with the Federal Tax Authority if your country of origin has a double tax treaty with the UAE.
For UAE residents, such as those with the Dubai digital nomad visa, you are automatically considered a tax resident and do not need to apply for the certificate, unless the above statement applies to you.
You can apply for the UAE tax resident certificate online at the Federal Tax Authority website. It takes about 45 minutes and the certificate is issued in three days.
Required Documents for the UAE Tax Residence Certificate
To apply, you will need to submit the following documents:
- Copy of passport
- UAE Residence Visa
- Proof of Residence (lease or property deed)
- Income statements
- Entry and exit report (if staying in the UAE for less than 183 days)
There is also an AED 1,000 ($273 USD) fee to obtain the UAE tax residence certificate.
How Digital Nomads Can Benefit from the New UAE Tax Laws
The new UAE tax laws make it easier for digital nomads to claim tax residency somewhere with favorable tax rates without spending 183 days in the country.
With the new 90-day tax residency rule, digital nomads can become tax residents in the UAE and have 0% income tax. However, they must not spend more than 183 days in any other country throughout the year, otherwise that country could claim them as tax residents.
The easiest way for digital nomads to become UAE tax residents, though, is by applying for the Dubai digital nomad visa. To be eligible, you only have to earn $3,500 per month working remotely.
With the residence permit granted by the digital nomad visa, you will automatically become a tax resident. Therefore, the question of where you owe taxes as a digital nomad disappears along with that hefty tax check you are likely to write each year.
Apply for the Dubai Digital Nomad Visa Today
Do you want to take advantage of the new UAE tax laws and obtain residency in the country as a digital nomad?
Apply for the Dubai digital nomad visa with Nomads Embassy: The World’s First Embassy for Digital Nomads.
We have partnered with hand-selected local immigration lawyers to assist you with your digital nomad visa application and becoming a tax resident in the UAE.
Plus, with our innovative and secure platform, you can upload your sensitive documents safely for our lawyers to review.
See if you’re eligible for the Dubai digital nomad visa to get started!