Setting up a business in the UAE comes with a wide range of financial benefits. However, it is essential for international entities to comply with legal and tax requirements to avoid complications and even financial stress.
For expats and residents in the UAE, information on tax rules is important. It is especially essential for every business that generates taxable income. One such important detail that must not be missed is obtaining the UAE Tax Residency Certificate (TRC). With TRC, businesses can leverage tax exemptions and avoid double tax deductions.
Here is your quick guide to obtaining one and safeguarding your global wealth.
What is a UAE TRC?
The Federal Tax Authority (FTA) issues the Tax Residency Certificate (TRC). People also refer to this certificate as the Tax Domicile Certificate, and it serves as official proof of tax residency in the United Arab Emirates. The TRC is a legal document that helps individuals benefit from the UAE’s extensive network of more than 130 Double Taxation Avoidance Agreements (DTAAs). Individuals can present this certificate to foreign tax authorities to avoid withholding taxes on cross-border income, such as royalties, dividends, and interest.
Eligibility Requirements for TRC
The FTA in the UAE has defined specific eligibility criteria for TRC, depending on your legal status:
For Companies: Companies applying for the TRC must have a valid trade license and be actively operating in the UAE Mainland or a Free Zone.
Establishment Period: Newly incorporated entities that have not yet filed a corporate tax return may apply for TRC after a 12-month period following their incorporation. On the other hand, active companies can submit an application after three months into their relevant financial tax period.
Offshore Exclusions: All offshore companies are generally excluded from obtaining a TRC.
For Individuals (183-Day Rule): Individuals seeking TRC can easily qualify by maintaining a 183-day mandatory physical presence in the UAE over a 12-month period.
For Individuals (90-Day Rule): Individuals with permanent residence in the UAE have flexible tax rules. Such individuals can qualify for TRC by demonstrating 90 days of physical presence. This flexibility is also available to individuals who hold employment or a business in the UAE and can prove that the UAE is their center of financial and personal interests.
Required Documents for TRC Application
Individuals and businesses looking for a Tax Residency Certificate must have the following documents for submitting an application:
Corporate Documents: Required documents include a valid trade license, a Memorandum of Association (MoA), a physical office lease agreement, and recent corporate bank statements.
Individual Documents: Submit your Emirates ID, a residential tenancy contract, clear proof of income, a valid residence visa, and a passport copy accompanied by an entry/exit report from immigration authorities.
The Application Process & Fees
The process of applying for the Tax Residency Certificate is straightforward. The application is submitted through the EmaraTax Portal. The TRC fee structure has recently become more stringent, and the entire fee must be paid upfront when submitting the application.
Applicants must pay an initial submission fee of AED 50. After approval, individuals or companies registered for Corporate Tax must pay an additional processing fee of AED 500. Non-registered users pay different fees: individuals must pay AED 1,000, while legal entities may pay up to AED 1,750. Applicants should note that the authority will not refund these upfront fees if it rejects an application due to incomplete documentation or residency mismatches.
Book an appointment with Carltrix for expert assistance to submit your application for the Tax Residency Certificate.
