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:
- Board of Directors Test – This examines where key management and commercial decisions are made by the board of directors.
- 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.
- 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
Important Disclaimer:
This article is for general informational purposes only and does not constitute professional tax, legal, or financial advice. Information is based on UAE laws and guidance as of the publication date. Laws may change. Seek professional advice before acting. MACROE accepts no liability for actions taken based on this content.
