What is UAE Tax Residency Certificate?
The UAE enjoys the highest-ranking economy in the Middle East and North Africa, and attained the World Bank’s top 20 ranking out of 190 economies for the first time in 2019. Thanks to the tax liberal policies and tons of business opportunities that the nation offers to everyone willing to do business in any of its Emirates regardless of their nationality. Being part of UAE’s thriving economy by setting up a business in Dubai is no less than a dream come true! It took a lot of effort and investment to reach where you are, and you would not want the double taxation system to ruin it.
Tax Residency Certificate is the answer to your double taxation worries. A certificate granted by the Federal Tax Authority (earlier by the UAE Ministry of Finance) to a company carrying out business operations in the nation to set up tax residency is termed as Tax Domicile Certificate or Tax Residency Certificate. The official document allows the receiver to benefit from the double taxation avoidance agreements (DTAA). The certificate aims to keep the taxpayer from being taxed twice in two different nations. . Resident individuals along with mainland and free zone entities are eligible to avail of a Tax Residency Certificate and unleash themselves from double taxation ties. However, offshore enterprises are not eligible to apply for TRC as they might not be present in the UAE physically. Once you receive your Tax Domicile Certificate Tax Residency Certificate, it will be valid for one year from the date of issue. It is also possible to claim back taxes if you have already paid them in the same year when you became a UAE tax resident.
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Entities eligible to apply for TRC
So far, UAE has signed the Double Taxation Avoidance Agreement with 100+ countries including Europe, Asia, Africa, the Middle East, South America, Central America, Oceania, North America, and the Caribbean. The UAE is planning to enlarge the list so that more nations can relish the benefits of the agreement and get motivated to prosper their business. When two nations sign the Avoidance of Double Taxation Agreement, the residents and investors of these countries can avail the benefits of the agreement via a Tax Residency Certificate. Public companies, private organizations, and various other firms, including investment firms and air transport firms operating in the UAE and residents of the country, can take advantage of the agreement. Except for offshore establishments, every onshore, as well as free zone company, can claim tax domicile/tax residence certificate in the UAE.
Tax Residency Certificate Procedure
The tax residency certificate process is slightly different for individuals and corporates. Whether it’s a person applying for the Tax Domicile Certificate or a company, both entities have to meet certain criteria to be eligible for the TRC.
Why Tax Residency Certificate?
The requirements for an individual Tax Residency Certificate
The individual applicant applying for the Tax Residency Certificate in the UAE must be residing in the UAE for at least 183 days; non-residents do not qualify to apply for the same. The resident applicant should present the copies of following documents required for Tax Residency Certificate:
Prerequisites for a corporate Tax Residency Certificate
The company applying for Tax Residency Certificate (TRC) must be functioning in the UAE for a minimum of one year and possess the copies of following documents required for Tax Residency Certificate:
- Trade license and partners’ attachment
- Establishment contract certified by official authorities (if it is not a sole proprietorship firm)
- Company’s owners/partners/directors’ passports, IDs & permits of residence
- Certified audited financial accounts
- Validated 6-month bank statement
- Certified lease agreement
- The organisational structure of the company (for companies other than sole propriety)
- Tax Residency Certificate Services in Dubai, UAE
Registration process & duration
One has to register themselves on the ministry website using their email ID or phone number to obtain the Tax Residency Certificate. After creating an account on the official site, they have to submit the duly filled application form along with the necessary documents in PDF or JPEG format for the application pre-approval. You may expect the pre-approval process to be completed within 4-5 days. Upon verification of the application and the documents, an email will be sent to the applicant, provided all the relevant documents are in place. It can take up to 5 more days to grant the Tax Residency Certificate after the final step i.e. fee payment. The applicant will receive the certificate via an express courier.
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