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A Complete Guide to Tax Residency Certificate UAE

The United Arab Emirates is the fastest developing business hub all around the globe. It converted itself from a desert city to a leading city of the world-class trade sector. The UAE has a diverse economy that attracts investors through its favorable tax policies. The government and the authorities are sincerely concerned about the fair implementation of taxes on individuals and companies. That’s the reason the UAE  has 123 double taxation agreements which are in effect or being negotiated.  In this agreement, the most beneficial relief for business owners is the Tax residency certificate UAE, which is formal proof as a tax resident.

The purpose behind the double taxation avoidance agreements (DTAA) is to ensure trade partners that a taxpayer will not have to pay taxes twice in two different countries. As a result, it promotes an open market for international trading and investment, while also protecting members from double taxation on the exchange of assets, capital, and services. In order to take advantage of the DTAA, businesses owners and companies placed in UAE must possess themselves a Tax Residency Certificate (TRC) also known as, Tax Domicile Certificate (TDC).

What is a Tax Residency Certificate UAE?

A tax residency certificate is an official document issued by the Ministry of Finance (MoF) which allows legal entities operating in the UAE to establish tax residency and to take advantage of the double tax avoidance agreements. You can get detailed guidelines from this page and this will help you to understand Excise Tax Consultancy Services in UAE.

Eligibility Criteria of TRC:

The tax residency certificate is open to any business operating in the free zones and on the mainland for at least a year. For offshore companies, the Tax Residency Certificate is ineligible because they are not listed in the Double Taxation Avoidance Agreements. Instead, they receive a tax exemption certificate. The Tax Residency Certificate eligibility is far different for an individual taxpayer and a company:

A natural person can apply for a tax domicile certificate after living in the UAE for at least 180 days and wish to obtain tax residency there. Also, they gain additional benefits if their native countries do not have a double taxation agreement with the UAE. Furthermore, an annual lease agreement officially attested by the competent authorities, such as municipalities in other Emirates, EJARI in Dubai, and free zone authorities that should be attached to the application.

Legal Person is eligible to apply for tax residency certificate UAE if he has been established company for at least one year. An authorized audit firm must audit or prepare financial statements and attach them to the application with other relevant documents. Applicants must attach a stamped audited financial report covering the year for which a certificate is being requested. In order to obtain a certificate for the current year, the audit report must cover the previous year.

Official Documents Requirements for Tax Domicile Residency

An individual must meet different requirements to obtain a Tax Residency Certificate UAE than a corporation. The details in both scenarios are mentioned below:

  1. For Legal Taxpayers
  2. Valid UAE Trade License Copy.
  3. Memorandum of Association or any relevant document.
  4. Official Bank Statement.
  5. Copy Certified commercial Tenancy contract.
  6. Authorized Signatory passport, valid UAE resident visa copy.
  7. Emirates ID of Authorized Signatory.
  8. Certified and stamped audited financial statements.

For Natural Taxpayers

  1. Passport copy and valid visa copy.
  2. Copy of Emirates ID.
  3. Stamped UAE bank statements.
  4. Evidence of the sources of income.
  5. Residency copy of taxpayer.
  6. Immigration report of residency.

How to Get a Tax Residency Certificate in UAE?

The tax residency certificate application process is completely online, on the official website of the Ministry of Finance. Below we discuss each step of TRC submission:

  1. Create an account on the MOF portal.
  2. Fill out the application form with supporting documents.
  3. You receive a confirmation email if the TRC application is verified.
  4. Pay the TRC fees and get payment verification.
  5. Finally, get the tax residency certificate with one-year validity.

Time Period for Acquiring TRC

The time frame of the pre-approval process for the Tax Residency Certificate / Tax Domicile Certificate is almost 4-5 working days. The Ministry of Finance (MoF) usually takes 5-7 working days for the issuance of TRC once it’s approved. The complete process of verification and issuance of tax residency certificate by MOF is about 2-4 weeks.

Tax Residency Certificate UAE Cost

The Tax Residency Certificate application fees are paid through an e-Dirham Card to the Ministry of Finance (MoF).
For legal entity payable cost is AED 10,000.
For individual taxpayers, the fee is AED 2000.

The Biggest Advantage of Getting a Tax Residency Certificate UAE

The corporates and individuals with these tax residency certificates gain maximum benefit from the UAE. Below we discuss a few advantages:

  • Ensuring fairness in their tax handling for companies and protecting the UAE national economy.
  • Implement suitable tax structures for your business offshore, free zone, or mainland.
  • With a double taxation avoidance agreement the taxpayer safe their income and capital gains from restraint taxes.
  • Individuals and corporates receive tax incentives by being a resident in the UAE.
  • Companies and individuals may obtain separate UAE Tax Residency Certificates that cover both levels of income.

Want Help in Obtaining a Tax Residency Certificate in Dubai

Effective tax planning and strategy are essential for each business to comply with the UAE regulatory authorities. The best way is to consult a professional tax advisor, as well as a financial consultant to handle your complex tax-related projects. The Bestax Chartered Accountants and Tax Advisors have expert knowledge in the acquisition of the TDC as well as any other regulatory approvals and licenses. They provide assistance on how to get Tax Residency Certificate in UAE as an individual taxpayer or a company in the UAE. So, feel free to consult our tax advisors for TRC submission.

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