There are a number of requirements that businesses must meet to be compliant with both local and international tax regulations. The Tax Residency Certificate (TRC), also known as the Tax Domicile Certificate, confirms the country of tax residence for a company or legal entity. In this post, we’re going to give you an overview of the Tax Residency Certificate, outline the benefits of establishing your tax residency in Dubai and list the requirements for both individuals and companies. Let’s dive in.
What is the Tax Residency Certificate?
The Tax Residency Certificate is an official document issued by the UAE Ministry of Finance that declares the tax residency of a person residing in the UAE or companies registered in the UAE. Upon issue, your tax residency certificate will have a year’s validity.
If you register a Free Zone or Mainland company in the UAE, you are entitled to obtain a Tax Residency Certificate. Offshore companies, also known as International Business Companies, however, are not able to claim a TRC: they can receive a Tax Exemption Certificate in place of the TRC. Here are some of the benefits of establishing your residency in Dubai:
- You can take advantage of the double taxation avoidance agreements between the UAE and your country to avoid income taxes back home.
- However, note that the United States requires all US citizens and permanent residents to declare tax returns, regardless of whether or not they reside in the US or not.
- If your home country is part of the CRS, you can use this certificate to establish your tax residency for proper compliance.
- You can reclaim taxes if you paid them in the same year as when you became a UAE tax resident.
- You can ensure fairness across the board for taxpayers, companies and individuals, protecting the national economy.
Requirements for certification of tax residence
As explained above, individuals residing in the UAE as well as companies registered in the nation are able to obtain a Tax Residency Certificate. It is especially advantageous for people whose countries do not have a double tax avoidance treaty with the UAE, such as the United States. The TRC serves as the official confirmation on the tax residency of a person or legal entity in the United Arab Emirates.
The requirements differ depending on whether the certificate of tax residence is for an individual or a business.
The requirements of individuals wishing to obtain the TRC are:
- Copy of your valid passport.
- Copy of your UAE residence visa.
- Copy of your Emirates ID.
- Six months of bank statements in the UAE.
- Valid proof of income in the UAE (employment agreement, salary certificate, etc.)
- Immigration report.
- Tenancy agreement or title deed (certified copy)
Companies also have to meet specific requirements prior to obtaining a Tax Residency Certificate. It is important to ensure you meet all the requirements before applying. Failure to do so may result in your application being rejected.
The requirements of companies wishing to obtain the TRC are:
- Copy of the company’s valid trade licence.
- Tenancy agreement or title deed (this should have been valid for a minimum of three months before the application).
- Physical office space.
- Copy of your valid passport.
- Copy of visa and Emirates ID of the company’s Director/Manager.
- An audited latest financial statement that has the company’s UAE bank statements for the last six months (stamped by the bank).
These documents will be filed with the Ministry of Finance, which will proceed with the compliance procedure and issue your Tax Residency Certificate in two to three weeks.
Looking for help with your Dubai tax residency?
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Written by
Adrian Oton
CEO, Europe Emirates Group
