Understanding Double Taxation and Tax Residency Certificate in UAE

Understanding Double Taxation and Tax Residency Certificate in UAE

Are you familiar with the Tax Residency Certificate in the UAE? This official document plays a significant role in avoiding double taxation. In this blog, we will understand what this certificate is, its benefits, and the process of obtaining it. Additionally, we will address two intriguing questions related to double taxation and UAE corporate tax. So, let’s dive in!

Recently, the Ministry of Finance issued a decision that provides clear guidelines for determining tax residency. Experts have emphasized that the UAE has a simple and transparent system for determining domestic tax residency. This system aims to ensure that individuals residing and working in the UAE are subject to fair and reasonable taxation. TRCs play a crucial role in preventing individuals who have been in the UAE for at least 180 days from being taxed twice, promoting a fair tax system for residents.

According to information provided on the Federal Tax Authority website, it takes approximately 45 minutes to complete and submit an application for the Tax Residency Certificate (TRC). Once issued, the TRC remains valid for one year, starting from the chosen financial year.

What is the Tax Residency Certificate, and how does it help in avoiding double taxation?

The Tax Residency Certificate, also known as the Tax Domicile Certificate, is a document that is officially issued by the UAE Ministry of Finance. It allows eligible individuals and companies to take advantage of the double taxation avoidance agreements (DTAA) signed by the UAE with over 76 countries.

Obtaining a Tax Residency Certificate

To obtain a Tax Residency Certificate, certain requirements and documentation are necessary. The specific documents needed vary depending on whether you are applying as a company or an individual. Below are the details of the necessary documents:

For Companies:

  • Valid Company Trade License Copy
  • Certified establishment contract (if applicable)
  • Shareholders’ and Manager’s Passport Copies
  • Shareholders’ and Manager’s Residence Visa Copies
  • Shareholders’ and Manager’s Emirates ID Copies
  • Certified copy of the recently audited financial statement or audit report
  • Latest and validated 6-month Company bank statement
  • Certified copy of Company lease agreement or Tenancy Contract
  • Relevant tax forms from the country where the certificate is to be submitted

For Individuals:

  • Passport Copy
  • UAE Residence Visa Copy
  • Emirates ID Copy
  • Certified copy of residential lease agreement or Tenancy Contract
  • Latest Salary Certificate
  • Latest and validated 6-month bank statement
  • Entry and exit report from the Federal Authority of Identity and Citizenship or a local competent Government entity (must be at least 180 days)
  • Relevant tax forms from the country where the certificate is to be submitted
  • The time span for processing and approval may vary. Generally, it takes 3-5 working days for pre-approval processing and an additional 4-7 working days for the issuance of the Tax Residency Certificate.

In conclusion, understanding Tax Residency Certificate is crucial for businesses and individuals operating in the UAE. This certificate offers opportunities to optimize tax benefits. Business Link’s PRO services specialize in filing Tax Residency Certificates. Simplify the application process and ensure compliance with expert assistance. Don’t let double taxation hold you back – reach out to learn more about our PRO services and file your TRC seamlessly today!