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FTA Guide on Tax Residency and Place of Effective Management (PoEM) in UAE

FTA Guide on Tax Residency and Place of Effective Management (PoEM) in UAE

19/10/2024

The Federal Tax Authority (FTA) has recently issued a detailed guide on Tax Resident and Tax Residency Certificates (TRC). A critical aspect covered in this guide is the assessment of the Place of Effective Management (PoEM). The following key tests, outlined in the guide, align broadly with internationally accepted standards:

  1. Board of Directors Test – This examines where key management and commercial decisions are made by the board of directors.
  2. Delegation Test – If decision-making authority is delegated, this test assesses where key management and commercial decisions are made by the designated body or individual.
  3. Shareholder Activity Test (particularly relevant for UAE-based family groups) – If shareholders undertake roles beyond standard 'shareholder functions,' the location where these key decisions are made must be evaluated.

Groups should review their structures to reassess PoEM risks in light of this new guidance.

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