Dubai, UAE — The UAE is preparing to offer flexibility on the tax residency rules that have put thousands of wealthy expats in a difficult position since the Iran conflict broke out — allowing them to maintain their zero-tax status even if they have been unable to meet the country's minimum presence requirements.
Authorities at the UAE's Federal Tax Authority (FTA) have privately signalled that applications will be addressed on a case-by-case basis rather than through blanket exemptions, according to two lawyers briefed by the FTA. The regulator is also working with the Federal Authority for Identity, Citizenship, Customs and Port Security on broader rule relaxations.
Why This Matters
The UAE operates two thresholds for tax residency. Expats must typically spend either:
- 183 days in the UAE within a consecutive 12-month period, or
- 90 days if they have significant ties — such as employment, a permanent home, or incorporated business interests — within the country
The UAE's tax year begins on January 1, meaning those who left when the conflict escalated on February 28 have already lost nearly three weeks of required presence. Without leniency — or a swift return — some risk falling below their threshold before year-end.
"Dubai has already seen its safety and security selling point damaged by recent events. It is really important for its economy and image to retain these expats," said Elsa Littlewood, a tax partner at BDO who advises high-net-worth individuals.
Additional Protections Available
Beyond the minimum-day thresholds, the UAE's residency framework includes two additional mechanisms that may help affected expats:
- Centre of Life Clause: Tax residency can be established if a person's "usual or primary residence and centre of financial and personal interests" are in the UAE — regardless of how many days were spent there
- Force Majeure: Authorities may take into account circumstances beyond a person's control when evaluating residency compliance
"The UAE government will react to the situation as needed, taking into consideration travel disruption on a case-by-case basis," said Michael Kortbawi, senior partner at Dubai's BSA Law.
The Stakes Are High for Dubai's Economy
Dubai has spent years positioning itself as the world's most attractive financial hub for mobile wealth — built on the twin pillars of zero income tax and perceived safety. The Iran conflict has tested both. British Airways suspended all Dubai flights until at least June, and the UAE's airspace has experienced intermittent closures, making it physically difficult for some expats to return even if they want to.
The financial risk for those affected is compounded if they are returning to the UK. British residents who no longer qualify for UAE tax residency could face significantly higher income tax bills from HM Revenue & Customs — making it doubly important for Dubai to retain their status.
"If they lose their UAE residency and are having to pay extra tax in the UK, that's a huge risk to Dubai," Littlewood added.
What Affected Expats Should Do Now
The FTA has not issued a formal public statement on leniency. Affected individuals are advised to:
- Document any evidence of travel disruption — flight cancellations, airspace closures, government travel advisories
- Consult with a UAE-based tax adviser on whether the "centre of life" clause or force majeure provisions apply to their situation
- Return to the UAE as soon as conditions allow to maximize their day count for the remainder of 2026
- File a residency application with supporting documentation once the FTA formally opens the case-by-case review process
For wealthy expats navigating the intersection of UAE policy and global finance, the next few months will be critical. The FTA's position — flexible in private, silent in public — suggests the government understands what is at stake, even if formal guidance has yet to follow.
