The UAE’s favorable tax environment is among the top reasons why it attracts investors, entrepreneurs, and professionals around the world. Despite the introduction of VAT and corporate tax in recent years, the UAE still maintains its status as an advantageous destination for tax savings, mainly due to the fact that there is no tax imposed on your personal income. Though you may enjoy tax benefits as an expat in the UAE, your income generated here may be subject to taxation in your home country depending on the applicable laws.
The UAE has signed Double Tax Treaties with numerous countries to avoid the double taxation of incomes. If you are a national of one of these countries, you can take advantage of these treaties. However, you must first prove yourself as a tax resident in the UAE, and for this purpose, obtaining a Tax Residency Certificate (TRC) in Dubai or any other Emirates is necessary. Also known as a Tax Domicile Certificate (TDC), this document helps you establish your tax residency status in the UAE.
What is Meant by Tax Residency in the UAE?
Individuals can be considered tax residents of the UAE, if it is the primary place of their residence as well as the place of their financial and personal interests. As per the Double Taxation Avoidance Agreements (DTAAs) signed by the UAE, an individual can be a resident of multiple countries but will be deemed as a tax resident of only one country. However, there are a set of eligibility requirements that need to be met for individuals to be considered as the UAE’s tax residents. We have explained these requirements in the upcoming sections.
What is a Tax Residency Certificate (TRC) in the UAE?
A Tax Residency Certificate (TRC) in Dubai and elsewhere in the UAE is issued by the Federal Tax Authority (FTA) and serves as proof that you are a tax resident here. This certificate can be obtained by individuals and legal entities provided they fulfill certain eligibility requirements. Also, both free zone and mainland companies, if eligible, can apply for and obtain a TRC. This certificate once issued remains valid for 1 year. Obtaining this certificate is key to proving your tax residency status in the UAE and securing the benefits of double taxation treaties.
Eligibility Criteria for Obtaining a Tax Residency Certificate in Dubai and Other Emirates
For individuals:
A natural person will be deemed as a tax resident if:
- the UAE is the primary or habitual country of his/her residence
- the UAE is the primary or habitual country of his/her financial interests
- he/she was physically present in the UAE for a duration of at least 183 days during a consecutive 12-month period
- he/she is a UAE national, a GCC national, or a UAE resident, and was physically present in the UAE for a duration of at least 90 days during a consecutive 12-month period, and
- has a permanent residency place in the UAE
- owns a business or is employed in the UAE
For juridical persons (e.g. LLCs, foundations, PJSC):
A juridical person may be defined as an entity that holds a legal personality that is distinct from its shareholders and directors.
A juridical person can be deemed as a tax resident if:
- it has completed at least 1 year since its incorporation in the UAE
- it is established or recognized under the UAE’s laws and regulations, or the laws of a foreign jurisdiction.
Documents Required to Obtain a TRC
For individuals:
- UAE resident visa copy
- Passport copy
- Emirates ID copy
- Proof of income
- Lease agreement or Title Deed in the UAE
- Bank statements (from last 6 months)
- A GDRFA report detailing all entries into and exits from the UAE
- Proof of permanent residence (UAE or other country)
For companies:
- MOA copy
- Trade license copy
- Audited financial accounts (certified copy)
- Company lease agreement copy ortenancy contract tax form copy
- Bank statements from the past 6 months
- Power of attorney (if the applicant is other than an individual authorized through the MOA)
Please note that you may require additional documents in addition to the ones mentioned above.
InZone is a renowned corporate service provider in Dubai, UAE, and can assist you in obtaining your Tax Residency Certificate. You can avail end-to-end assistance with business setup as well as other services including accounting, tax consultancy, VAT registration, true copy attestation, POA preparation, and so on.
