Here we provide clarification on what a Dubai Tax Residence Certificate (TRC) is, and in which cases it is useful to have. By its definition a Tax residency certificate (also called tax domicile certificate) is an official document issued by the respective authority confirming the Tax residence of a company or a legal entity in a country.
In the UAE, the Tax residency / Domicile certificate is issued by the Ministry of Finance of UAE. The certificate can be issued to a company registered in the UAE as well as for individuals who are residing in the UAE. The validity of a Tax residency certificate is one year from the date of its issue.
One of the main advantages of doing business in the UAE is the fact that by registering a Free Zone Company you can obtain a UAE Tax Certificate. The Tax residence certificate is issued to a resident company operating in the country, such as Mainland Dubai and a Free Zone Company and permits the company to fully utilize the advantages of the extensive double taxation treaties. An Offshore Company, also called International Business Companies (IBC) is not entitled to the tax treaty benefit and cannot receive such certificate.
However, UAE offshore companies can receive a tax exemption certificate.
Benefits of Tax residency in UAE:
- use double taxation avoidance agreement between UAE and your country in order to levy income taxes at home
- claim back the taxes in case you had paid them in the same year when you became a UAE tax resident
- fairness across the board for taxpayers, companies or individuals, and protecting the national economy
As already mentioned, individuals who are residing in the UAE can obtain a tax residency certificate. Furthermore, it can also be used for the double tax treaties advantages.
In the circumstances when there is no double tax treaty between UAE and some particular country, the residency certificate can be of the great importance as it serves as the official confirmation on the tax residency of a person or a legal entity in the United Arab Emirates.
The process to receive a tax residency certificate depends on the type of the certificate – for an individual person or a company.
For individuals and companies, conditions need to be fulfilled before applying for a Tax Residence Certificate.
Listed below are the necessary requirements to obtain the Tax Residency Certificate:
- Valid passport copy
- UAE Residency visa copy
- Emirates ID copy
- Six months UAE Bank statement
- Valid proof of income in the UAE (e.g., employment agreement, salary certificate, etc.)
- Immigration report
- Tenancy agreement or title deed (certified copy)
For companies, there are also specific qualifications that should be met before obtaining a Tax Residency Certificate. A company cannot directly request for the tax certificate without verifying if a company is qualified, as the application might be rejected.
Below is the list of the requirements that companies are required to meet:
- Copy of the company’s valid trade license
- Tenancy agreement or title deed (this should be valid for a minimum of three months before the application)
- Physical office space
- Valid passport copy
- Copy of visa and Emirates ID of the company’s Director/Manager
- Audited latest financial statement that has or the company’s UAE bank statements for the last six months (should be stamped by the bank)
The documents and the application are provided to the Ministry of Finance, which will proceed with the compliance procedure and will issue the Tax Residency Certificate within approximately 2-3 weeks.
EEG has an exceptional level of experience in offering professional structuring for international customers and tax planning:
- Processing all legal filings, forms, and applications;
- Assisting in meeting all tax requirements;
- Advising a right investment structure that adds value to your business;
- Incorporating suitable tax structures for your business in the UAE such as offshore, Free Zone or Mainland;
- Using the benefits of double taxation treaties to optimize your taxes and cut restraining taxes on income, capital gains, etc.;
- Using the benefits of double taxation agreements to maximize your taxes and cut restraining taxes on income, capital gains, etc.