Tax Residency Certificate in UAE

Introduction

The United Arab Emirates (UAE) has emerged as a dynamic global economy, attracting investments worldwide. Renowned for its advanced technology and tourist appeal, the UAE offers a favorable tax climate, making it a tax-free haven for many businesses. This guide sheds light on the essential aspect of obtaining a Tax Residency Certificate (TRC) in the UAE, a crucial element in the Double Taxation Avoidance Agreements (DTAA).

Understanding Tax Residency Certificate

Definition: 

A Tax Residency Certificate (TRC), also known as a Tax Domicile Certificate, is issued by the Federal Tax Authority under the provisions of DTAA. Valid for one year, this certificate is granted to both individuals and companies, ensuring protection against double taxation. 

Eligibility Criteria: 

Individuals residing in the UAE and operating businesses in mainland or free zones can apply for a TRC. However, offshore-based businesses without a physical presence in the UAE may not qualify. 

Objectives of TRC in the UAE 

• Demonstrating residency in the UAE. 
• Preventing double taxation. 
• Facilitating cross-border trade and investment. 
• Promoting UAE’s development goals. 
• Supporting economic diversification. 

Required Documents for TRC Application 

For Individuals: 

• Passport and valid residence permit copy. 
• ID card copy. 
• Certified residential lease agreement copy. 
• Validated six-month bank statement. 
• Salary certificate. 
• General Directorate of Residency and Foreigners Affairs report. 
• Tax forms (if applicable) from the destination country. 

For Companies: 

• Trade license and partners’ attachment copies. 
• Certified establishment contract (if not a sole proprietorship). 
• Directors’ passports, IDs, and residence permits copies. 
• Certified audited financial accounts copies. 
• Validated six-month bank statement. 
• Certified lease agreement copy. 
• Organizational structure details (if not a sole proprietorship). 

Application Process for TRC in the UAE 

• Create an account on the official government website. 
• Complete and submit the application form. 
• Attach all necessary documents in PDF or JPEG format. 

• Upon meeting criteria, receive an email notification. 
• Pay the fee, and the certificate will be delivered via express courier service. 

Processing Time for TRC in the UAE

• Initial application stage: 4-5 working days. 
• Post pre-approval stage: Additional 5 days for TRC issuance. 

Change in Authority

As of November 2020, the issuance of TRC in the UAE shifted from the Ministry of Finance to the Federal Tax Authority per Cabinet Decision No. 65 of 2020. For queries or assistance, consider reaching out to Jazara, leveraging their extensive experience. 

Double Taxation Avoidance Agreement (DTAA) 

Definition: 

DTAA is a preventive measure against double taxation when two countries impose taxes on the same taxpayer for the same income. The UAE has signed agreements with over 100 countries, promoting economic cooperation and preventing double taxation. 

Benefits of DTAA: 

• Aids in achieving growth objectives. 
• Eliminates double taxation and prevents tax evasion. 
• Facilitates smooth cross-border trade. 
• Adapts to global economic and financial changes. 
• Encourages the exchange of goods, services, and capital flows. 

UAE & KSA DTAA Implementation

The DTAA between the UAE and Saudi Arabia, effective as of [Date], marks a historic agreement benefiting individuals and companies in both nations. Key provisions include the elimination of withholding tax on interest and service fees, fostering bilateral trade and investment. 

Conclusion 

A TRC in the UAE serves as a vital tool for businesses and individuals, ensuring tax efficiency and preventing double taxation. Understanding the application process, required documents, and the broader context of DTAA enhances compliance and facilitates seamless cross-border transactions. For further guidance and assistance in obtaining your tax residency certificate, reach out to Jazara—a trusted partner with a proven track record in this field.