In the rapidly growing economic landscape of the UAE, international trade opportunities are abundant, but they can also bring complexities within the tax system. One of the challenges faced by businesses is the issue of double taxation. To tackle this challenge, the Tax Residency Certificate (TRC) in the UAE emerges as a practical solution.
What is the TRC?
The TRC is a certificate that enables eligible government entities, businesses, and individuals to benefit from double taxation treaties signed by the UAE. For individuals, the applicant must have been a UAE resident for at least 180 days, while for legal entities, a minimum establishment period of one year is required.
How to Obtain Your TRC with Ease
Obtaining a Tax Residency Certificate in the UAE can be a hassle-free process with the assistance of financial institutions like Al Marzaan Consultancy. By securing a TRC in Dubai, you can ease your tax burden and leverage the advantages of adhering to a double taxation treaty. Any business operating in the UAE for at least a year, whether on the mainland or in a free zone, is eligible to apply for this certificate.
Determining Tax Residency in the UAE
For Natural Person
tax residency is determined by factors such as their primary place of residence and financial interests in a specific state. Specific criteria outlined by the Minister may need to be met.
- The usual place of residence and center of financial and personal interests are used to determine tax residency. If a person is a permanent resident, the state is considered their usual place of residence. The center of financial and personal interests is determined by various factors, including profession, relationships, cultural interests, business location, property ownership, and other relevant conditions.
- An individual may be considered a tax resident if they spend 183 days or more within a consecutive 12-month period in the state.
- If an individual has resided in the state for 90 days within 12 consecutive months and meets certain criteria (UAE resident with a valid residence permit, GCC nationality, and engagement in employment or business activities), they may also be considered a tax resident.
For Legal person
Tax residency is determined by whether the entity was established, organized, or acknowledged by state law. If there’s a valid agreement to avoid double taxation between the state and another jurisdiction, the terms of that agreement take precedence in determining tax residency.
Documents Require for TRC
The documents needed to obtain a TRC may vary depending on the applicant’s category:
For Companies:
- Copies of directors, shareholders, or managers’ passports and valid UAE residency visas
- Current UAE trade license (Mainland DED or Free Zone) and a minimum of one year in operation
- Memorandum of Association
- Recent certified audited financial statements or bank statements for the previous six months, stamped by the bank
For Individuals
- Passport, UAE Residence Visa, and Emirates ID copies
- Residential lease agreement or tenancy contract
- Latest salary certificate
- Verified bank statement from the previous six months
- Report from the GDRFA detailing entries, exits, and the number of days spent in the UAE
Steps to Obtain TRC
The online process for applying for a Tax Residency Certificate involves the following steps:
- Login or signup for a Tax Certificate account on the FTA Portal
- Fill out the application and upload the required documents
- Pay the application fee
- Monitor the application status on the dashboard
- Pre-approval typically takes 4-5 days, and the TRC is issued within 5-7 working days after approval.
Downloading TRC
After payment, the TRC can be downloaded from the FTA Tax Certificate dashboard. The certificate is password-protected, with the username and the last four digits of the user’s mobile number serving as the password.
Validity and Fees
The TRC in Dubai is valid for one year from the date of issue and is accepted by both individuals and businesses. Additional applications may be submitted as per certain conditions. The fee for issuing a TRC is AED 2,000 plus AED 3, while the application fee is AED 100 plus AED 3. For duplicate or damaged certificates, the fee is also AED 100 plus AED 3.
Benefits of TRC
Acquiring a Tax Residency Certificate in the UAE offers numerous benefits:
- Exclusion of income taxes for individuals and businesses
- Encouragement of international trade
- Confirmation of legal status in the UAE
- Avoidance of additional taxes during import-export processes
- Enhancement of bilateral trade relations
- Avoidance of double taxation and access to tax exemptions
- The possibility for individuals and companies to acquire multiple certificates
TRC Services in UAE
For sound tax compliance and improved governance, professional tax guidance is crucial. Al Marzaan Consultancy, a leading Tax consulting Firm in Dubai, specializes in TRC-related services in the UAE. Our team of experts streamlines the process by assisting with required documents and certificates, ensuring a swift and efficient TRC procedure.
