To benefit businesses and individuals, the FTA created the Tax Residency Certificate in the UAE. With this certificate, both can benefit from the agreements of the UAE with other nations and avoid double taxation. However, they must meet the requirements demanded by the Federal Fiscal Authority and make the respective request.
In this article, we will define what this certificate is and who can request it. In addition, you will know the benefits, requirements, and the complete process to obtain the certificate. Let us see:
1. What is a Tax Residency Certificate?
2. How to apply for the Tax Residency Certificate in the UAE?
3. What are the documents required to obtain the UAE Tax Residency Certificate?
4. Processing time and costs of the Tax Certificate
5. How to carry out the application process for the Tax Domicile Certificate in the UAE?
6. We can help you secure your Tax Residency Certificate
1. What is a Tax Residency Certificate?
The UAE Tax Residency Certificate (TRC) is issued by the Federal Tax Authority (FTA). With it, business owners and independent workers can establish their tax residence in the UAE and avoid double taxation. This certificate is for people residing in the Emirates, organizations, or legal entities.
This certificate, also known as the Tax Domicile Certificate in the UAE, is intended for companies with more than 1 year of commercial activity. These companies may have been operating on the Mainland or in one of the established free zones. However, offshore companies do not meet the eligibility criteria and must apply for a tax exemption certificate.
On the other hand, the criterion for natural persons is that they must have resided in the country for at least 6 months. This especially benefits people who come from countries where there is no double taxation agreement with the UAE. In this case, applicants must have a residence visa valid for more than 180 days.
1.1 What is the Commercial Activities Certificate?
The Commercial Activities Certificate allows the person who owns it to claim a refund of the VAT paid outside the country. Note that it has nothing to do with the application of the Double Taxation Avoidance Agreements (DTAA). This certificate of status of a company or legal person, allows the holder to claim this refund, if applicable.
We are talking about Value-Added Tax payments that a company or person must make outside the UAE. You should consult with emirate tax agents or a specialized agency like our firm. In this way, the process to obtain this certificate will be much easier to carry out.
2. How to apply for the Tax Residency Certificate in the UAE?
To apply for the Tax Certificate in the UAE, if you are working in the country, you must be a resident for no less than 6 months. To become a resident of the United Arab Emirates, you can fulfill the process in several ways. However, to obtain the appropriate visa, you need the advice of an expert consulting agency.
With our guidance, you can go through the visa process smoothly and correctly from the start. On the other hand, if you are an entrepreneur looking to start a company in the nation, you can opt for the Tax Residency Certificate. Below, you will see the eligibility criteria to apply for the TRC:
- If you are a natural person, you must be a resident of the UAE for a minimum of 180 days (6 months).
- Companies must have been carrying out their activities for at least one year in the country.
- You must have an Emirates ID, a valid email, and an account with the Ministry of Finance.
- Foreign branches in the UAE cannot apply for Tax Residency Certificate in Dubai or another emirate.
- Similarly, unemployed people, such as spouses of salaried people, cannot apply for a TRC.
2.1 What are the benefits of obtaining a Tax Residency Certificate?
The government of the United Arab Emirates offers great opportunities for individuals and companies that contribute to economic growth. Consequently, it has created policies that benefit local and foreign workers and businesses in many ways. There are several benefits that you can get with the UAE Tax Residency Certificate.
- They will prevent double taxation thanks to agreements with numerous countries (DTAA). With this agreement, you will not have to pay income tax in your country of origin.
- Holders of this certificate will receive tax incentives as long as they are doing business in the UAE.
- They will not have to pay additional taxes through the import-export process.
- They will have legal recognition, both companies, and individuals.
Thanks to the 115 Double Taxation Avoidance Agreements (DTAA), the Emirates ensures the promotion of its objectives and economic development. Companies or individuals with a UAE TRC can carry out the necessary tax planning. In addition, businesses will be able to expand and access international markets by having a Tax Residency Certificate in Dubai or Abu Dhabi.
However, people from the United States must declare the corresponding taxes in that country. This is due to the requirements of the North American country, which demands that its citizens make the said declaration, whether or not they reside in its territory. However, if your country of origin belongs to the CRS, you can establish your tax residence without any problem.
In addition, you can claim taxes if you paid them in the year when you obtained the TRC certificate. In this way, there is equity for taxpayers whether they are companies or natural persons, benefiting the national economy.
3. What are the documents required to obtain the UAE Tax Residency Certificate?
To obtain the Tax Residency Certificate, there are different requirements for companies and individuals. Below, you will see what the requirements are for both types of taxpayers.
3.1 Requirements to obtain the Tax Residency Certificate in the UAE for companies
The documents required for a company to obtain a Dubai tax residency certificate are:
- A valid and active business license for more than 1 year in a Free Zone or on the mainland.
- Copy of the Memorandum of Association.
- A copy of the Certificate of Ownership of the company issued by the UAE Chamber of Commerce.
- The latest audited financial statement of the company. Otherwise, you can provide bank statements for the last 6 months, stamped by an authorized local bank.
- The organizational scheme of the company.
- Copy of a passport and a UAE resident visa, both valid.
- A copy of the Emirates ID of the directors, shareholders, or managers of the business.
On the other hand, you need to prove that the company has a physical office in the UAE, as virtual offices are not acceptable.
3.2 Requirements to obtain the Tax Residency Certificate in the UAE for people
Workers who wish to obtain the UAE Tax Residency Certificate must submit the following documents:
- A copy of the valid passport and visa, issued at least 180 days before the TRC application.
- A copy of the Emirates ID.
- Proof of receiving income in the country, i.e. an employment contract, stock certificate, or salary certificate.
- Personal bank statements for the previous 6 months, stamped by a bank in the United Arab Emirates.
- A report detailing all the entries and exits from the UAE issued by the General Directorate of Residence and Foreign Affairs.
- Property title or copy of the certified lease, valid for at least three months before application.
4. Processing time and costs of the Tax Certificate
The processing time and obtaining the Tax Residency Certificate depends on several factors but normally consist of:
- The pre-approval process can take 4-5 business days and is carried out by the UAE Federal Tax Authority. In this step of the process, confirmation is made that the uploaded documentation is correct and the application form must be completed.
- For its part, the issuance of the certificate takes about 5 business days after approval and confirmation. In addition, you must have paid the corresponding application fees.
Regarding the validity of this VAT certificate in the UAE, it is valid for 1 year. However, you can renew it by carrying out an easy resubmission and renewal process.
4.1 What are the fees you need to pay to obtain your certificate?
Individuals or companies wishing to obtain the Tax Residency Certificate in Dubai must pay the corresponding fees. The fees for the application of the certificate, according to the characteristics of the applicant are:
- Legal entities without tax registration must pay AED 1750.
- Legal entities holding tax registration will pay AED 500.
- For natural persons without tax registration, the amount is AED 1000.
In addition, the cost of issuing the TRC is AED 2,000 for individuals and AED 10,000 for companies. Also, if you lose or damage the original Tax Certificate in the UAE, you will need to pay AED 103 for a replacement. All these fees must be paid to the UAE Federal Tax Authority using the e-Dirham card.
This e-Dirham card is similar to a credit or debit card.
5. How to carry out the application process for the Tax Domicile Certificate in the UAE?
The process of applying for the UAE Tax Residency Certificate must be carried out on the portal of the FTA. The steps to fulfill the request are as follows:
- Create an account on the official website of the UAE Federal Tax Authority, as follows:
- Click on “Create new account”.
- Fill in the requested information correctly, including name, email, address, and username. In addition, you must create a strong password, as well as a code, security answer, and hint for this answer.
- After this, the system will redirect you to the login page where you must enter the username and password.
- Select the option “Create Tax Residency Certificate”.
- Now, you must select whether you are registered as a taxpayer, and select the corresponding option.
- The user must select whether they are a natural or legal person in the reason for requesting the certificate.
- Once you have chosen the appropriate option, you will need to complete the application form.
- At this point, you must upload the necessary documents in valid formats for the application (PDF or JPEG).
- Then, the review of your application and the documentation you have uploaded on the page will begin, according to the requirements.
- If everything is in order, you will receive a confirmation email and you will have to pay the remaining fees. This payment must be made in the same online system of the FTA through your e- Dirham card.
- Once you have confirmed the final payment, you will receive the Tax Domicile Certificate in the UAE via courier.
6. We can help you secure your Tax Residency Certificate
Workers or companies that want to take advantage of the double taxation exception must obtain the UAE Tax Residency Certificate. In addition, the said certificate will allow them to have a legal presence in the United Arab Emirates. With this, they can take advantage of the great business opportunities that the country offers, while contributing to the local economy.
On Connect Group, we have all the tools and professionals to make this process as simple as possible for you. In addition, we offer other professional services to companies and individuals, including the following:
- Real estate
- Staff outsourcing
- Employer of Record
- Professional Employment Organization
- Freelance visa
- Visa services
- Business center
- Company formation
- HR outsourcing
- Payroll outsourcing
- Cybersecurity solutions
- Immigration services and more.
Do you want to receive more details about the Tax Domicile Certificate or TRC? Do not wait any longer to let us answer to your doubts and contact us through our email contact@connectgroup.co. In the same way, you can request any further assistance by calling us at +971 43 316 688.
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