A Comprehensive Guide on Obtaining a Tax Residency Certificate in UAE
The UAE has transitioned itself into a broad economy that attracts investment from all over the world in a relatively short amount of time. They’ve earned a reputation as a worldwide financial hub that embraces cutting-edge technology, as well as becoming a popular tourist location and global financial hub. The UAE’s generous tax climate is one of the numerous advantages that lure firms to the country. The great majority of enterprises that have their headquarters in the UAE are tax-free. Acquiring a tax residency certificate in UAE as part of the Double Taxation Avoidance Agreements (DTAA) guarantees that the same taxpayer is not taxed twice in two different nations.
What is a Tax Residency Certificate?
Tax residency certificate, also known as Tax domicile certificate, is issued by Federal Tax Authority as per the provisions of avoidance of double taxation agreements. The certificate is valid for a year and is issued to individuals as well as companies.
Companies or individuals must have a Tax Residency Certificate (TRC), in order to take advantage of the UAE’s double taxation avoidance agreements.
Who is eligible for a Tax Residency Certificate (TRC) or a Tax Domicile Certificate in UAE?
People who live in the UAE and own mainland or free zone businesses are eligible to apply for a Tax Residency Certificate or Tax Domicile Certificate. Since offshore businesses may not have a physical presence in the UAE, they could be ineligible to request a tax residency certificate.
Objectives of UAE tax residency certificate
- To prove that the applicant is a resident of UAE
- To avoid paying taxes in two countries
- Ease the process of cross-border trade and investment flows
- Encourage the development goals of UAE
- Economic diversification
Required documents for submitting the Tax Residency Certificate application (for individuals and Companies)
Tax residency certificate For individuals
A person applying for the Tax residency certificate in UAE(TRC) should have stayed in the UAE for at least 180 days; non-residents cannot apply.
Documents required for Tax residency certificate:
- A copy of the passport and valid permit of residence
- A copy of the ID card
- A certified copy of the (residential) lease agreement
- Validated 6-month bank statement from a local bank
- Salary certificate
- A report from the General Directorate of Residency and Foreigners Affairs specifying the duration of stay
- Tax forms (if any) from the country where the certificate needs to be submitted
Tax residency certificate for companies
If a company needs to apply for Tax residency certificate (TRC), then they should have functioned in the UAE for minimum one year.
Documents required for Tax residency certificate:
- A copy of the trade license and partners’ attachment
- Establishment contract certified by official authorities (if it is not a sole company)
- A copy of the company’s owners/partners/directors’ passports, IDs and permits of residence
- A certified copy of the audited financial accounts
- A validated 6-month bank statement
- A certified copy of the lease agreement
- The organizational structure of the company (if it is not a sole Company)
What is the procedure involved in acquiring the Tax Residency Certificate UAE?
- Create an account on the official site
- Fill the application form
- Attach the necessary documents in PDF or JPEG format
Upon verification of the application and the documents, an email will be sent to the applicant, provided the criteria are met. Following this, fee payment will have to be done and the applicant will receive the certificate via express courier
How many days does it take to get the UAE Tax Residency Certificate?
- The pre-approval process usually takes 4-5 working days, if all the relevant documents are in place.
- Once the pre-approval process is completed, it can take up to another 5 days to issue the tax residency certificate.
Change of Authority in issuing the tax residency certificate in UAE
The Ministry of Finance was responsible for the issuance of tax residency certificate in UAE till November, 2020. It was then changed to Federal Tax authority as per the Cabinet Decision No. 65 of 2020.
If you wish to avail tax domicile certificate in UAE or if you have any query related to it, contact Jumeira Consultants. We have been in the field for quite a long time and have helped numerous clients obtain tax residency certificate.
What is double taxation avoidance agreement?
When two countries impose tax on the same tax payer on the same tax base, it is termed as double taxation. To avoid this, countries sign a tax treaty. UAE has entered into a double taxation avoidance agreement with more than 100 countries. In 2018, the country signed the treaty with Saudi Arabia, the first GCC country in the list.
It was the Ministry of Finance that was in charge of issuing tax residency certificates until recently. But, now the issuing authority has been changed from MoF to the Federal Tax Authority.
Want to know more?
A guide on Double Taxation Avoidance and Tax Domicile certificate in UAE
Tax Residency Certificate FAQ’s
How can I get a tax domicile certificate in the UAE?
To acquire a tax domicile certificate in the UAE, there are a few procedures you must undergo. Jumeira Consultants can assist you in doing so in the quickest and easiest way possible.
Do I need a UAE tax residency certificate?
Businesses and individuals need to get a tax residency certificate in order to take advantage of the double taxation agreements in the UAE.
What do you mean by Tax Residence Certificate (TRC)?
A Tax Residence Certificate is a document issued by the Federal Tax Authority that verifies the applicant’s official status as a UAE resident under a specific Double Taxation Treaty (DTT) between the UAE and a foreign authority.
What is the purpose of a Tax Residence Certificate?
A Tax Residence Certificate is the primary document used to support a claim for Double Taxation Treaty (DTT) benefits.
Is it possible for an individual to receive a Tax Residence Certificate as an individual?
Yes, if you fulfil the requirements as prescribed in the law in effect at the time.
What are the prerequisites for obtaining a Tax Residence Certificate for an individual?
The following are the requirements:
- A copy of your passport and a valid visa that was issued at least 180 days ago
- A copy of your Emirates ID
- Personal UAE bank statements for the last six months, stamped by the bank
- Proof of income in the United Arab Emirates
- Report on Immigration (GDRF) (report proving all entrances into and exits from the UAE)
- A certified copy of a tenancy contract or a title deed that has been valid for at least three months previous to the application.
What are the prerequisites for obtaining Tax residency Certificate for companies?
To obtain tax residency certificates, a firm must have operated in the UAE for at least one year and meet the following requirements:
- A copy of the trade license, as well as the attachments of the partners
- Establishment contract certified by official authorities (if it is not a Sole Company)
- A copy of the owners’/partners’/directors’ passports, IDs, and residency permits
- A certified copy of the financial statements that have been audited
- 6 month bank statement that has been verified
- A copy of the leasing agreement that has been certified
What is the difference between Tax Residency Certificate and Residency visa?
A Tax Residency Certificate is a document granted to natural and legal persons who are entitled to benefit from the UAE’s double taxation avoidance agreements on income.
Residency visa is granted to a foreigner when he/she is already within the nation after arriving the UAE via an entrance permit, short or long-term tourist or visit visa.
How long does Tax Residency certificate normally take to process?
If all of the necessary documentation is in order, the pre-approval procedure normally takes 4-5 working days. The tax residence certificate might take up to 5 days to be issued when the pre-approval process is finished.
What is the general pricing structure for obtaining Tax Residency Certificate?
- For individuals:
For submitting the application, you must pay 100 Dirhams plus 3 Dirhams paid through an e-Dirham Card.
For issuing the certificate: 2,000 Dirhams+ 3 Dirhams, paid through e-Dirham Card.
- For companies:
For submitting the application, you must pay 100 Dirhams plus 3 Dirhams by e-Dirham Card.
For issuing the certificate: 10,000 Dirhams + 3 Dirhams, paid through e-Dirham Card.
What is the TRC's validity period?
The validity duration of a Tax Residency Certificate is typically one year from the date you get it. You will need to get a new TRC when the certificate expires.
Is it possible for a free zone firm to receive a TRC?
All onshore and free zone enterprises in the UAE can apply for a TRC through the Federal Tax Authority (FTA) portal.
Is it possible for a UAE offshore firm to receive a Tax Residence Certificate?
No, because offshore firms are considered non-resident corporate entities for tax purposes.
What is the procedure for obtaining a Tax Residency Certificate?
The application for the Tax Residency Certificate can be found on the website of the Federal Tax Authority. It must be precisely filled out with the accurate information. The FTA will look over this and decide whether or not to approve it. Payment should be made by the applicant when the FTA has approved it. The person who applied for the tax residence certificate can pick it up from the Federal Tax Authority after making the payment.
What kinds of people are eligible for a TRC?
Legal individuals and persons, as well as qualifying government agencies, can get TRCs. This certificate is available to residents of the UAE, whether they live in a free zone or on the mainland.
How can Jumeira Consultants assist you in obtaining TRC?
Jumeira Consultants has direct connection to government offices and ministries and can assist you in obtaining the TRC as well as any other regulatory clearances and licenses. Please contact us if you require assistance in obtaining a Tax Residency Certificate in the UAE as an individual or a corporation, or for any other relevant firm establishment, restructuring, local partner, or PRO support concern.
For any queries, feel free to collaborate with us https://www.jumeiraconsultants.com/contact-us/