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Mumbai: Nearly 2.8 million Indians live in United Arab Emirates It will not currently benefit from the newly introduced wider tax residency rules that came into force on March 1.Contrary to what some may believe, simply by dubaiOne cannot become overnight UAE tax resident.
On the other hand, from June 1, businesses doing business in the UAE will have to pay a 9 percent tax if their revenue exceeds the annual threshold of AED 3,75,000 (approximately Rs 8.3 million). The decree – “Taxation of Companies and Businesses” – also covers individuals conducting business or commercial activities in the UAE.
Under the India-UAE tax treaty, salary income from work performed in the UAE is taxable in the UAE only if prescribed conditions are met, such as duration of stay. In addition, individuals who qualify as UAE tax residents benefit due to the lower tax rates under the Indian source income treaty. For example, interest income is only taxed at 12.5% ​​in India, and dividends from Indian companies are taxed at 10%.
The UAE Cabinet’s specification for defining tax residency sets a wide range of alternatives beyond the 183-day stay standard set out in the India-UAE treaty. Fulfilling any one of these conditions qualifies an individual as a UAE tax resident. For example, an individual may be considered a UAE tax resident and entitled to a Tax Residence Certificate (TRC) if he/she has permanent residence and their center of financial or personal interests is in the UAE.
Rutvik Sanghvi, partner at CA firm Rashmin Sanghvi & Associates, noted, “The India-UAE tax treaty provides for a specific test where an individual must accumulate at least 183 days in the UAE in a calendar year to be considered a tax resident of the UAE, so there is However, Article 6 of the UAE Cabinet Decision states that the criteria set out in international agreements will not be affected by the new domestic residency rules. Therefore, Indian expatriates cannot resort to the broader new tax residency rules to obtain tax benefits of the agreement.”
Dhruva Advisors CEO Dinesh Kanabar highlighted the need to renegotiate the India-UAE tax treaty to ensure tax residency criteria are in line with UAE domestic law. He referred to the recent rulings of the Delhi and Mumbai High Courts which affirmed that an effective TRC should entitle individuals to tax treaty benefits.
On the other hand, from June 1, businesses doing business in the UAE will have to pay a 9 percent tax if their revenue exceeds the annual threshold of AED 3,75,000 (approximately Rs 8.3 million). The decree – “Taxation of Companies and Businesses” – also covers individuals conducting business or commercial activities in the UAE.
Under the India-UAE tax treaty, salary income from work performed in the UAE is taxable in the UAE only if prescribed conditions are met, such as duration of stay. In addition, individuals who qualify as UAE tax residents benefit due to the lower tax rates under the Indian source income treaty. For example, interest income is only taxed at 12.5% ​​in India, and dividends from Indian companies are taxed at 10%.
The UAE Cabinet’s specification for defining tax residency sets a wide range of alternatives beyond the 183-day stay standard set out in the India-UAE treaty. Fulfilling any one of these conditions qualifies an individual as a UAE tax resident. For example, an individual may be considered a UAE tax resident and entitled to a Tax Residence Certificate (TRC) if he/she has permanent residence and their center of financial or personal interests is in the UAE.
Rutvik Sanghvi, partner at CA firm Rashmin Sanghvi & Associates, noted, “The India-UAE tax treaty provides for a specific test where an individual must accumulate at least 183 days in the UAE in a calendar year to be considered a tax resident of the UAE, so there is However, Article 6 of the UAE Cabinet Decision states that the criteria set out in international agreements will not be affected by the new domestic residency rules. Therefore, Indian expatriates cannot resort to the broader new tax residency rules to obtain tax benefits of the agreement.”
Dhruva Advisors CEO Dinesh Kanabar highlighted the need to renegotiate the India-UAE tax treaty to ensure tax residency criteria are in line with UAE domestic law. He referred to the recent rulings of the Delhi and Mumbai High Courts which affirmed that an effective TRC should entitle individuals to tax treaty benefits.
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