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TAX Residency Certificate2021-12-06T08:41:06+04:00

TAX Residency Certificate

UAE TAX Residency Certificate / UAE Tax Domicile Certificat

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“Taxes are the lifeblood of government and no taxpayer should be permitted to escape the payment of his just share of the burden of contributing thereto”

Arthur Vanderbilt
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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?

Expanding your business on a global level certainly brings with it tons of benefits. Not only operating on a global platform is beneficial for business persons, but also for nations involved. No wonder, we are seeing a roar in cross-culture business activities. The only downside of taking your business activities to the other side of the border is that you might get taxed multiple times in different jurisdictions. To tackle this issue and keep businesses from losing their hard-earned money, countries entered into a Double Tax Avoidance Agreement. You need the Tax Residency Certificate if you don’t want to fall victim to Double Taxation. The majority of establishments that have their headquarters in the UAE are tax-free. The Tax Residency Certificate is an official document that serves various purposes such as

 

  • The undisputed document substantiates that the applicant is a UAE resident. The tax authorities worldwide honour this certificate as proof of issuing country residency.
  • The certificate holder doesn’t have to pay the taxes twice.
  • It simplifies the process of cross-border trade and investment flows
  • The document promotes the nation’s development goals
  • It also helps in economic diversification
  • TRC ensures fairness across the board for taxpayers, companies or individuals, and thus protects the national economy.
  • Plausive provisions of withholding tax and permanent establishment offer great opportunities for businesses in the UAE to plan tax-efficient structures.

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. 

Contact Adam Global

If you wish to avail of Tax Domicile Certificate in the UAE or if you have any queries pertaining to Tax Residency Certificate. We have been helping corporates and non-corporates in acquiring the Tax Residency Certificate for years. Our Tax Residency Certificate Support Team is hands-on with the entire process and has delivered support to a multitude of clients to obtain their Tax Residency Certificate without any hassles. 

 

FAQs

For how long Tax Residency Certificate is valid? What happens when it expires?2021-12-06T08:21:50+04:00

Any Tax Residency Certificate issued by UAE authority comes with the validity of 1 year from the date of issue. You are required to obtain a new TRC when the certificate expires.

Is obtaining a TRC mandatory for Indian entities in the UAE?2021-12-06T08:21:29+04:00

India has made it obligatory to acquire TRC for a person who wishes to avail any DTAA benefits of a treaty that India has entered into with the UAE.

What is the total fee for TRC issuance?2021-12-06T08:21:06+04:00

The TRC issuance fees are more affordable after 14/11/2020. But how much you are going to fork out for your TRC depends on certain factors. For instance, the fee for submission of a fresh application for a Tax Residency Certificate is just AED50. For a review of the same and issuance of an electronic certificate to a registrant, with the authority is AED 500. The same will cost AED 1750 to a legal person and AED 1000 to a natural person, both not registered with the authority. An applicant can get the printed paper copy of the issued Tax Residency Certificate by paying AED 250.

Can I use it in multiple countries?2021-12-06T08:20:37+04:00

Corporates and non-corporates both can use the Tax Residency Certificate for one specific country at a time. However, application for more than one TRCs is possible, if required.

What is double taxation?2021-12-06T08:19:55+04:00

As the name suggests, double taxation is a tax principle referring to income taxes paid two times on the same source of income. It can happen when income is taxed at both the corporate level and personal level. Double taxation occurs in international trade or investment as well, when the same income is taxed in two different countries. It can occur with 401(k) loans as well.