Tax Residency Certificate in UAE- A Comprehensive Guide

The UAE is the desired economic country for many investors from all over the world. The most preferred reason why these investors invest or start a business in the UAE is because of its favorable tax preference.

For this reason, a double taxation agreement was reached with many countries in the world to eliminate the situation of being charged taxes in two different countries on the same person.

Some of the inviting features of UAE to residents are no taxes plus the double taxation treaties signed with many giant nations of the world including Canada, Germany, India, and the UK. However, to enjoy the outcomes of these treaties and have access to the appealing corporate tax of the UAE, a tax residency certificate is required. Suppose you meet the criteria for tax residency and follow the conditions in the agreements. In that case, it is possible to get a Tax Residency Certificate in UAE with the help of the mentioned contacts.

This averts circumstances where the same person paying the tax is being charged by two countries, this is due to the signed double tax agreement between the UAE and many countries around the globe. In addition, of the many firms within the UAE, a significant number of these organizations are not required to pay income taxes. To take advantage of these Double Taxation Treaties in the UAE, a firm or an individual is required to obtain a Tax Domicile Certificate abbreviated TDC or a Tax Residency Certificate abbreviated TRC.

What is a Tax Residency Certificate in UAE?

A tax residency certificate otherwise known as TRC is a legal document that certifies an individual’s tax residency status in any given country.

TRC, also known as the certificate, is awarded to a company in the UAE by the UAE Federal Tax Authority (FTA) to consider it as a tax resident of the country and enjoy double taxation relief treaties. The mentioned certificate – also referred to as a tax domicile certificate in UAE – is issued for a person residing in the UAE, an organization, or a legal entity.

Tax Residency Certificate in UAE

Any company that is carrying business activities in the Mainland or Freezone of UAE and has been in operation for a year or more can apply for the Tax Residency Certificate in UAE. However, where the company is an offshore company it cannot apply for this and must get the Tax Exemption Certificate as opposed to the Tax Residency Certificate.

Also, any person intending to avail of the Tax Residency Certificate has to have been a resident of the UAE for at least 180 days. This is more beneficial to persons who come from countries of their origin that have not signed a double taxation treaty with the United Arab Emirates. To apply for it, one has to hold a valid UAE resident visa for more than one hundred and eighty days.

Conditions to obtain the Tax Residency Certificate in UAE

  • UAE Trade Licence, active for more than one year in either the Mainland DED or Freezone license.
  • A copy of the Memorandum of Association of the company
  • The Certificate of Incumbency for the company (commonly the Chamber of Commerce certificate)
  • A copy of the title deed of a certified commercial tenancy agreement with a physical business premises as a virtual business address will not be accepted unless it is proven that the business has operated from the said address for not less than three months prior to the time of applying.
  • A notarized photocopy of a biometric passport and a UAE resident visa.
  • Copy of the directors, shareholders, or managers’ Emirates ID
  • The latest certified audited financial statement or bank statements of the UAE company for the last six months attested by the UAE Bank
  • The Federal Tax Authority(FTA) charges a service fee for the Tax Residency Certification(TRC).
Tax Registration Certificate in UAE- A Comprehensive Guide

Eligibility Criteria for Tax Residency Certificate in UAE Applicants

Individual Applicant Requirements

Applicants wishing to apply for a TRC need to spend at least 183 days in the UAE in the financial year of their application. This aspect plays a crucial role in identifying the eligibility of other residents. Nonetheless, only the branches of the foreign and offshore companies will not be regarded as residents and, therefore, cannot obtain a TRC.

Corporate Entity Requirements

Such companies must have been based in the UAE for over one year before they can apply for a TRC; thereby proving that they are very much present there. Also, before companies can be issued with a CAC, they need to be registered for the UAE Value Added Tax because the CAC basically confirms that they are engaged in business in the UAE.

Special Considerations for Non-Residents

Citizens of other countries that wish to obtain tax certificates have to produce convincing evidence of their stay in the UAE and their economic activity. In this regard, there is documentation of physical presence and financial interests. Amid the high standards expected of the FTA, foreign entities have to keep detailed records of their sojourns and financial transactions.

UAE Tax Residency Certificate in UAE Timeframe

The timeframe for the UAE Tax Residency Certificate is as follows:

  • Pre-approval process: It takes 4 to 5 working days for the approval of the UAE Federal Tax Authority and confirmation of all uploaded documents to ensure they are correct once you have filled out the application form and uploaded all the necessary documents.
  • Certificate issue process: 30 days after and in consideration of the approval and confirmation of the UAE Federal Tax Authority as well as the payment of the application fees.
  • Validity of Certificate: The validity of the Tax Residency Certificate / Tax Domicile Certificate is for one year / each year and may be renewed upon submitting the renewal process.

Advantages of obtaining the Tax Residency Certificate in the UAE

  • It is unique to UAE that personal and corporate UAE Tax Residency Certificates can be obtained which enables income to be accounted for both on personal and corporate levels.
  • No double taxation and tax resident incentives when getting the status of a resident in the UAE
  • International markets when you are establishing your business in either Dubai or Abu Dhabi

Bizdaddy Edge

  • Consultation: For information on how to apply for a TRC, we offer advice to decide the merit of applying for a TRC and evaluate your needs according to the applying person or business.
  • Documentation Assistance: Our team is ready to help in filling in the application forms, as well as providing other necessary documents, such as documentation as evidence of financial solvency.
  • Application Submission: We go through the entire process of application submission to the respective tax governing bodies with all the necessary documentation and comprehensive details to facilitate quick processing and issuance of the TRC.
  • Follow-up and Support: We also chase the tax authorities as much as on behalf of our clients and support them until the end of their application where we attend to all questions and further demands that the authorities may have.