UAE Law and Practice Contributed by: Yann Mrazek, Kath Zagatti, Hermione Harrison and Keerthi Voodimudi, M/HQ Corporate Services Ltd
the deceased’s nationality or the UAE civil personal status regime. Nationality and religion therefore play a more sig- nificant role than domicile in determining succession rights. Asset location is also critical, particularly in relation to UAE-situs real estate, which must pass through local probate and transfer procedures regard- less of the deceased’s domicile. Jurisdiction for Divorce and Inheritance Claims Jurisdiction in family and inheritance matters is gener- ally linked to residence and asset location rather than technical domicile. UAE courts may assume jurisdic- tion where one or both parties reside in the UAE or where assets are situated within the UAE. 2.2 Income Tax Residency Natural Persons An individual conducting business in the UAE is con- sidered a resident person for CT purposes only if they conduct business or business activity in the UAE and their total turnover from such business activity exceeds AED1 million in a Gregorian calendar year, liable on UAE business income or foreign business income related to the UAE business activities. This threshold is crucial as it distinguishes between personal investment income, wages and real estate investment income (which are generally not subject to CT for natural persons) and income derived from a qualifying business activity. If a natural person’s taxable income from a business or business activity exceeds this threshold, it will be subject to CT at a rate of 0% for taxable income up to AED375,000 and 9% for taxable income exceeding AED375,000. Tax Residency (Individuals) – for TRC/Treaty Purposes For the purpose of obtaining a tax residency certifi- cate from the UAE authorities, an individual is deemed to be UAE tax resident if they meet any of the following for the relevant 12 months period: • has been physically present in the UAE for more than 183 days;
• has been physically present in the UAE for more than 90 days and has a place of residence, job, or business in the UAE; and • does not meet any of the day counting tests but has: (a) usual or principal place of residence; and (b) centre of financial and personal interests in the UAE. Resident Entities Entities incorporated in the UAE or effectively man- aged and controlled within the UAE are treated as resi- dent persons and taxed in the UAE on their worldwide income. Non-Resident Entities Foreign corporations are subject to tax in the UAE if they have a permanent establishment or nexus in UAE, on profits attributable to such permanent estab- lishment/nexus in the UAE. The concept of permanent establishment includes fixed place of business and dependent agent permanent establishment. Domicile and Treaty Tie-Breakers Domicile is not an independent basis for determin- ing UAE tax residency for individuals or companies. However, where a person (individual or legal entity) is regarded as tax resident in more than one jurisdiction, domicile (for individuals) and other connecting factors (for entities, including place of effective management or similar criteria) may become relevant under the tie-breaker rules of an applicable double tax treaty to determine a single treaty residence. 3. Intestacy and Forced Heirship Laws 3.1 Intestate Succession The inheritance regime in the UAE depends primarily on the religious status of the deceased and whether a valid will is in place. Distinct legal frameworks apply to Muslim and non-Muslim individuals, resulting in materially different outcomes where an individual dies intestate or where testamentary dispositions conflict with mandatory inheritance rules. For Muslim individuals, succession is governed by Sharia principles as reflected in Federal Decree-Law
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