Resident Person Status under UAE Corporate Tax: Are You Really Taxable?

When the UAE introduced its 9 % corporate tax, one label determined whether your worldwide profits are in scope: “Resident Person.”

Get this wrong and you could pay tax you never owed—or face penalties for under‑declaring.

Below is a plain‑English breakdown of the residency tests, grey areas, and a 2025 compliance checklist.

1. Who Qualifies as a Resident Person?

Test	Who Passes	Why It Matters
Incorporated in UAE	Mainland LLCs, Free‑Zone entities, PSCs	Automatic residency; worldwide income unless Free‑Zone 0 % applies.
Effective Place of Management (EPM) in UAE	Effective Place of Management (EPM) in UAE	Makes the overseas entity a Resident Person; global income taxable.
Business Income for Individuals	Sole proprietors, influencers, freelancers with a UAE trade licence (or needing one)	Employment salary exempt, but side‑hustle profits are taxable.

2. Resident vs. Non‑Resident Tax Scope

Status	Income Subject to UAE Tax	Typical Example
Resident Person	Worldwide income (unless exempt)	UAE LLC with a UK branch
Non‑Resident Person	Only UAE‑sourced income or PE profits	German GmbH selling goods into UAE with no PE

3. Common Misconceptions

Myth	Reality
“My company is in a Free Zone, so I’m non‑resident.”	Free‑Zone entities are Resident Persons; they just may get 0 % on qualifying income.
“Back‑office in Dubai isn’t EPM.”	If strategic control sits in Dubai, the foreign entity becomes resident—back‑office alone won’t, but decision‑making will.
“Dormant company = no return.”	Resident status means all entities must file, even nil returns.

4. Compliance Checklist for 2025

• Map decision‑making: board minutes, C‑suite location.
• Register within 3 months of becoming resident.
• Segregate UAE vs. foreign income in your ledgers.
• Review double‑tax treaties for credit relief.
• Document EPM evidence (or absence) every year.
• File returns on time, even if taxable income = 0.

5. Action Steps for Businesses & Freelancers

1. Companies: Confirm where key management decisions are made.
2. Foreign HQs: Keep board meetings abroad or accept residency and plan for 9 %.
3. Freelancers: Separate trade‑licence income from exempt employment salary.
4. Free‑Zone Firms: Track non‑qualifying income; 0 % doesn’t cover everything.

How INDGenius Accounting Helps

• Residency diagnostics—30‑minute review of shareholding & EPM.
• Entity structuring—switch from branch to subsidiary if it lowers tax.
• Return filing & treaty relief—ensure no double taxation.