Acquiring a Tax Residency Certificate (TRC) in the UAE is a crucial step for businesses and individuals seeking to navigate the complexities of the international tax system and mitigate the impact of double taxation. The TRC enables eligible government entities, businesses, and individuals to leverage the double taxation treaties established by the UAE.
In order to qualify for a TRC, individuals must demonstrate residency in the UAE for a minimum of 183 days, while legal entities must have been established for at least one year. Fortunately, obtaining a Tax Residency Certificate in the UAE is a streamlined process, with support available from financial institutions such as Corppluse. By securing a TRC, businesses and individuals can alleviate tax burdens and capitalize on the benefits offered by double taxation treaties in Dubai.
Businesses that have operated within the UAE for at least a year, regardless of whether they are based on the mainland or in a free zone, are eligible to apply for a Tax Residency Certificate, making it an accessible opportunity for entities engaged in the country's thriving economic landscape.
Determination of Tax Residency for Individuals in the UAE
In the UAE, the determination of tax residency for natural persons is based on several factors, including their primary place of residence and the center of their financial and personal interests within a specific state. Meeting specific requirements outlined in a decision from the Minister may be necessary for this determination.
An individual's usual or primary place of residence and the center of financial and personal interests are used to establish their tax residency. A state is considered an individual's usual or primary place of residence if the person is a permanent resident. Additionally, if the state is where these interests are most closely tied or of substantial importance, it is also regarded as the center of their financial and personal interests. The center of financial and personal interests is determined by various factors, including an individual's profession, relationships, cultural interests, place of business, property management, and other relevant conditions.
An individual may be considered a tax resident of a state if they are physically present there for 183 days or more within a consecutive 12-month period.
If an individual has resided in the state for 90 days within 12 consecutive months and holds a valid residence permit in the UAE, has the nationality of any member state of the Gulf Cooperation Council (GCC), and meets any of the following criteria:
If the person is a permanent resident of the state.
If they carry on employment or business activities in the state.
Determination of Tax Residency for Legal Entities in the UAE
In the UAE, a juridical or legal entity is considered a tax resident of the State if either of the following situations applies:
It was established, organized, or acknowledged by state law, indicating that the organization was lawfully constituted within the boundaries of the state.
The tax residency of a juridical person is determined by the applicable state tax law. If there is a valid agreement in existence between the state and another jurisdiction to avoid double taxation, and this agreement sets the criteria for establishing tax residency, the terms of the tax treaty will take precedence in determining the juridical person's tax residency status.
Documents Required for Obtaining a Tax Residency Certificate
Several essential documents must be provided to obtain a Tax Residency Certificate, and the specific requirements may vary depending on the entities involved. The following outlines the necessary documents for different parties:
Requirements for Companies
Copy of the Certificate of Incorporation.
Corporate organizational structure.
Copies of the passports of directors, shareholders, or managers, along with valid UAE residency visas.
The business must have been in operation for at least a year and possess a current UAE trade license (Mainland DED or Free Zone).
Copy of the company's Memorandum of Association.
The UAE company's most recent certified audited financial statements or bank statements for the previous six months, duly stamped by the bank.
Requirements for Individuals
Copy of Passport, UAE Residence Visa, and Emirates ID.
Copy of the residential lease agreement or tenancy contract.
Latest salary certificate.
Recent and verified bank statements from the previous six months.
Report from the General Directorate of Residency and Foreigners Affairs detailing all entries and exits, along with the number of days the resident has stayed in the UAE.
Requirements for Investors
Company license.
Name of the partner.
Any other documents mentioned earlier.
Requirements for Housewives
Marriage certificate.
Copies of the passports and residency permits of both spouses.
Partner's salary certificate and work contract.
Duration of Tax Residency Certificate Validity
The Tax Residency Certificate (TRC) in Dubai remains valid for a duration of one year from the date of issue. This certificate, commonly referred to as TRC Dubai, is recognized for use by businesses and individuals. Depending on specific circumstances, additional certificate applications may be submitted.
It is essential to note that offshore companies are ineligible to obtain Tax Residency Certificates. Instead, these entities are eligible for a tax exemption certificate.
Advantages of Obtaining the Tax Residency Certificate
The UAE's favorable tax environment is just one of the numerous factors that draw businesses to the region. Now that we understand the necessity of a Tax Residency Certificate in the UAE, let's explore the significant benefits of acquiring one:
Exemption from income taxes for individuals and businesses.
Facilitation of international trade.
Confirmation of an individual's or organization's status within the UAE legal framework.
Streamlined import-export procedures, reducing the risk of additional tax payments.
Enhancement of bilateral trade relationships.
Opportunity to avoid double taxation and capitalize on tax exemptions as a UAE resident with the certificate.
Possibility for individuals and companies to obtain multiple certifications.
Tax Residency Certificate Services in the UAE
Ensuring compliance with tax regulations and improving your company's governance requires expert tax counsel and guidance. A carefully developed tax strategy offers an impartial assessment of your business model and personal circumstances.
Corppluse is a leading tax consulting firm in Dubai, specializing in providing services in the UAE, specifically related to the Tax Residency Certificate (TRC). Our team of experts is dedicated to simplifying the process for you and ensuring a swift and efficient completion of the TRC procedure by assisting with the necessary documents and certificates.
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