In the current day, business activities are expanding all over the world. This enhances international trade relations, but it also causes a problem when it gets caught up in the tax system. Businesses are increasingly dealing with the issue of double taxation as a result of trade migration. To address this issue, the United Arab Emirates created a tax residence certificate. It is also known as a domicile tax certificate in the UAE, and it benefits people and businesses by removing the burden of paying tax in their home country through the use of a double taxation treaty. In a broader way, a Tax Residency Certificate, issued by the Federal Tax Authority, evidencing the applicant’s formal status as a UAE resident in respect of a specific Double Taxation Avoidance Agreement (“DTAA”) between the UAE and a specific foreign jurisdiction is the core document in support of an application to seek the benefits of a Double Taxation Treaty.
A double taxation treaty encourages international trade and investment while simultaneously protecting member countries against double taxation on products, capital, and services traded. A Tax Residency Certificate is available to any company operating on the mainland or in a free zone that has been operating in the country for at least a year (TRC). Tax Residency Certificates are not available to offshore firms; instead, they must get a tax exemption certificate. It is a wonderful chance to invest in a business in the United Arab Emirates. One of the many aspects that attract businesses to the UAE is its advantageous tax environment.
Now that we’ve established why a tax residence certificate is required, let’s look at why it’s so important to obtain one:
- It aids in the development of bilateral business partnerships.
- It confirms a person’s or company’s legal status in the United Arab Emirates.
- Personal and business income taxes are not applicable.
- Avoid paying multiple taxes throughout the import-export process.
- It encourages international trade to a considerable extent.
- Being a UAE resident helps you to avoid paying double taxes and take advantage of tax breaks.
To obtain the TRC in UAE, individuals and corporations must satisfy specified standards. To acquire a tax residency certificate, the applicant must first complete an online process. The actions to take online are as follows:
Step 1: Create an account on the Ministry of Finance’s (MoF) payables portal.
Step 2: To the best of your abilities, complete the application form.
Step 3: In PDF or JPEG format, attach the needed documentation.
Step 4: Your application and any attachments will be examined, and if they fit the criteria, you’ll receive an email confirmation and be sent to the system to pay the balance.
Step 5: Once your money has been confirmed, the certificate will be sent to you by express courier.
Both individuals and companies are required to provide certain papers. For firms in the UAE, the procedure for getting a tax residence certificate is almost the same with individuals. The following are the conditions for obtaining a tax residency certificate in the United Arab Emirates:
- A copy of the Memorandum of Agreement for the firm (Memorandum of Association).
- A copy of the company’s Certificate of Incorporation, which is usually a Chamber of Commerce certificate.
- The organisational chart of the firm.
- For the last six months, a UAE firm’s most recent certified audited financial accounts or bank statements, stamped by the bank.
- A valid UAE trade license (Mainland DED or Free Zone) is required, and the firm must have been in operation for at least a year.
- A confirmed commercial leasing contract copy or title deed are required, as well as actual office space and also copy of the directors’, shareholders’, or managers’ passports, as well as a copy of their valid UAE resident visa.
The UAE government has begun issuing this certificate for business purposes in order to take advantage of the DTT’s benefits and transform a risk into an economic opportunity. Individuals must provide the following papers to apply for a tax residency certificate in the UAE.
- A copy of your passport, your UAE residence visa, and your Emirates ID are all required.
- A certified copy of the (residential) lease agreement or a copy of the tenancy contract.
- Salary Certificate (Certificate of Salary).
- A bank statement from the previous six months that has been verified.
- The UAE’s General Directorate of Residency and Foreign Affairs (GDRFA) has released a report documenting all admissions and exits
These activities benefit the firm’s growth and development, which in turn helps the country thrive. We recommend seeking professional tax guidance to ensure that your organizational model and present condition are in compliance with tax rules, and in today’s competitive business climate, outsourcing these operations allows companies to focus on their core competencies, so you can get the major advantage of TRC in UAE.
