Tax Residency Certificate in UAE: Eligibility, Document and Process

For individuals living or earning income across multiple nations, the issue of double taxation—paying taxes on the same income in both countries—can arise. To address this, many countries, including the UAE, have signed Double Taxation Avoidance Agreements (DTAA) with countries they maintain diplomatic and economic relations with.

In the UAE, residents whose income is already taxed in another country may be exempt from taxation under the terms of a DTAA. However, to benefit from such agreements, obtaining a Tax Residency Certificate (TRC) is essential. 

This blog will provide a comprehensive guide on the Tax Residency Certificate in the UAE, including its purpose, eligibility criteria, the required documentation, the step-by-step application process, and the advantages it offers. 

What is a Tax Residency Certificate (TRC) ? 

A tax residency certificate TRC is a legal document that verifies an individual’s or legal entity’s residency status within the country. This residency certificate helps to avail the benefits of a DTAA and avoid taxation on the income for which tax is already paid or to be paid outside UAE.

The TRC, also known as the “tax domicile certificate in UAE” is crucial if your income is subjected to taxation in more than one country. This certificate allows you to do more efficient tax planning and get both financial and economic benefits. 

Note: A double taxation avoidance agreement is a treaty signed between two countries, with significant cross-border transactions to avoid taxes on the same income. 

Who Can Apply for a Tax Residency Certificate in the UAE? 

The following individuals/entities are eligible to apply for a tax residency certificate TRC: 

For an Individual

• Must have a primary place of residence and centre of financial and personal interest in UAE. 
• You have been physically present in UAE for more than 183 days in the last 12 months, or
• You have been physically present in UAE for more than 90 days in the last 12 months but also fulfilled these conditions. These conditions are also valid for tax residency certificates for NRI in UAE. 
• UAE citizen, GCC National, or expatriate
• Permanent residence in UAE
• Work or conduct business in UAE.  

For a Legal Entity

• Recognised as a tax entity under UAE laws.
• Established as an entity in UAE.
• An entity with an establishment outside UAE but effective management control is with a person who is a tax resident in UAE. 
• Existence of a minimum of one year.
• Audited financial statements with certified accounting firms.

Note: Offshore companies cannot apply for a TRC certificate in UAE,  as they don’t have a physical presence in the UAE. 

Tax Residency Certificate UAE Requirements

How to Apply for a Tax Residency Certificate in UAE: A Step-by-Step Procedure

Getting a TRC certificate in the UAE is not that typical. With these steps in mind, you can easily apply and obtain the TRC. 

1. Ensure you meet the eligibility criteria and residency requirements. 
2. Collect all the required documents and convert them into either PDF or JPEG  format.
3. Apply online through the Federal Tax Authority portal. 
4. If you’re already a registered taxpayer, then enter your TRN and email address. 
5. If you’re a new taxpayer, then enter “NO” and fill in the required details.
6. Fill out the TRC registration application.
7. Upload your documents.
8. Pay the application fees
9. Once completed, the approval takes 4-5 days.
10. After approval, the TRC comes within 5-7 working days. 

Fee Payable for Tax Residency Certificate

• Submission fees: AED 50
• Tax registrants: AED 500 (individuals and companies)
• Non-tax registrants but individuals: AED 1000
• Non-tax registrants but companies: AED 1750 
• Additional AED 250 for a hard copy of the certificate. 

Validity and Renewal of a TRC

A TRC once approved, will be valid for 1 year. Every individual or legal entity has to reapply every year in order to renew the tax residency certificate, following the same process. 

How to Download a Tax Residency Certificate? 

You can download the tax residency certificate in the following way: 

1. Once the FTA receives your application and fees, it approves the same within 4-5 days. 
2. Then you can download the TRC certificate by logging into the portal on the FTA website. 
3. Further, if you want the hard copy, you can apply through the portal by paying an additional fee of AED 500. 

Benefits of Getting a Tax Residency Certificate

Some of the prominent benefits of getting a tax residency certificate are as follows:

• To take advantage of the double taxation avoidance agreement (DTAA)
• The TRC strengthens an individual’s/business’s credibility in the eyes of authority.
• Avail the benefits of withholding taxes on dividends, royalties, interest, and other such income.
• Planning and structuring of tax liabilities efficiently.
• Accessing foreign markets effectively without the liability of added taxation. 

Conclusion

To wrap this up, a tax residency certificate in UAE is a benefit that individuals/legal entities can avail to maximise their credibility and avoid double taxation. The application process is a straightforward approach without any complexities. By submitting the required documents and fees, individuals and entities can avail of tax treaty benefits and ensure they’re complying with the relevant laws and regulations.