When supporting our clients planning to relocate to the UAE or advising on international transactions, a tax residency certificate (or TRC) is a conversation that is very commonly discussed. In this blog, we have put together all the frequently asked questions relating to the TRC. The FTA is the regulatory authority issuing the TRC in the UAE.
If you want to take advantage of DTA and the tax benefits of being in UAE, you may be required to obtain a TRC in UAE. Considering it is a reasonably easy procedure this is something that many business owners forget to obtain until it is too late.
Why you should know this
There have been some updates in the TRC regulations in the UAE, the below are some of the most frequently asked questions with updated answers for 2023. There is also new system that is used to apply for the TRC, which is directly on the FTA portal rather than the Ministry of Economy portal.
The Tax residency certificate or TRC is a document that proves the tax residency of this person. If a TRC issued in the UAE is received, the person can use this document to prove that taxes on income must be paid in the UAE (even if it is at 0%) and not in another country.
The UAE has signed Double Taxation Agreements (“DTA”) with many countries. An updated list of DTAs can be found on the Ministry of Finance’s website. For an individual or company to take advantage of the DTA they may be required to provide a TRC. In order to benefit from a DTA, a person is generally required to provide a TRC to prove that the person is resident in another country and subject to tax in that country.
No, It is not mandatory to apply for a TRC in UAE. The tax residency certificate is only applied for if this needs to be submitted in another country. For example -
1) Some individuals need to prove that they are residents in UAE, to not pay taxes in their home country.
2) When some companies have customers in other countries, they may need to submit a TRC to prove their residency in the UAE.
If either of the following conditions are satisfied the individual or natural person will be considered a tax resident in UAE-
1) If UAE is the usual or primary place of residence and the financial & personal interests are in UAE.
2) Be physically present in the UAE for at least 183 days out of 12 consecutive months, or
3) Be physically present in the UAE for at least 90 days out of 12 consecutive months and also:
(i) has a UAE visa or a GCC passport, and
(ii) has a permanent place of residence in the UAE or has employment or business in the state.
The ministry has issued another resolution that discusses these points in detail. For most business owners the third condition makes it very easy for foreign nationals to get a TRC in UAE.
1. Passport copy
2. Residence Visa copy
3. Emirates ID copy
4. A certified lease agreement (Ejari)
5. Source of income (Salary certificate, Trade License, etc)
6. Bank statements for 6 months from a UAE bank account
7. A report from GDRFA or ICA
8. Tax forms (if any) from the country in which the certificate is to be submitted.
If either of the following conditions are satisfied the company or juridical person will be considered a tax resident in UAE-
1) Incorporated in the UAE (does not include branches of foreign entities), or
2) Is considered a tax resident by the tax law here.
1. A copy of the trade license and directors/shareholders' attachment.
2. Establishment Card
3. Passports of owners
4. Emirates ID of owners
5. Residence visa of owners
6. A certified copy of the Audited financial statements of the year for which the certificate is to be issued.
7. Validated bank statements for 6 months from a local UAE Bank.
8. A certified copy of the lease agreement
9. Tax forms (if any) from the country in which the certificate is to be submitted.
For professional tax advice book an appointment with our tax experts.
Six Mistakes Everyone Makes during UAE VAT Registration
27 Jan 2021
Calculation of Taxable Income | 9% UAE corporation tax | UAE Public Consultation Document
19 Jul 2022
Insights on Public Consultation Document UAE 9% Corporate Tax
01 May 2022
Residents & Non-Residents Corporate Tax | UAE Public Consultation Document
26 May 2022