Before going into details on tax residency certificates, we need to define what this document really means. The TRC is the document confirming that a company or a person has the status of tax resident in the UAE from the viewpoint of the UAE authorities. In the case of Dubai, the UAE, the Tax Residency Certificate (TRC) is being issued by the Ministry of Finance of the UAE.
It is important to note that the Tax Residence Certificate obtained in the UAE does not mean that tax authorities of other countries would accept your full tax residency in the United Arab Emirates.
The tax or fiscal residency is the set of rules and requirements to be fulfilled, and these are different from country to country. For example, to be tax / fiscal resident in the jurisdiction of the UAE, you need to fulfill some certain criteria. However, when you have fulfilled these UAE criteria, the same criteria may not be sufficient for not being a tax resident of another country as well.
For example, the most common international regulations on tax residency say that to be fiscal resident in a given country, you need to spend more than 180 days in that country. This will probably bring you to a conclusion that if you spend in such other jurisdiction less that 180 days, you would be considered as tax non-resident there. However, this may be not a case. Apart from the days spent in a given country, there are a number of other factors. Also highly important are the place which is the center of your interests, availability of real estate and other links to a country.
For example, you spend in Dubai or other Emirate of the UAE more than 180 days. Though your business is in Spain and your family is living in Spain as well. In this case, you would also still be considered the Spanish tax resident from the standpoint of the Spanish Tax authorities, even though you would be able to receive the UAE tax residence certificate. There are also multiple other factors to consider as well thus for each case related to tax domicile in other countries you need to consult with the tax advisor in your home country. And we go ahead with our article on the specifics and facts on tax residency and the TRC certificate applicable to Dubai, the UAE.
The UAE tax residency certificate can be received / obtained by physical persons as well as companies. In the case of persons, the main eligibility criteria are the availability of the UAE resident visa as well as a place in the UAE which you can use for living plus some other criteria. For Companies – the companies can be onshore companies only (free zone and mainland), the company’s director has to be the UAE resident (mans can be a foreigner who has the UAE residency visa) as well as fulfill some additional criteria. The exact criteria ad applicable rules depend case to case thus, to know the exact criteria for you and your company – please contact us to get the extensive support and help of our advisors on the entire procedure.
Tax rates for UAE Tax residents – companies and individuals
For the persons who are considered resident / domiciled in the jurisdiction of the UAE, the tax on all types of personal income, except the real estate income, the rate of tax is zero. On the income on real estate in the form of rental income the tax on such income is 5% rate and levied automatically with the utility bills payments, means no tax declarations are to be made.
On companies – similar rules apply. Presently for UAE-domiciled companies, there are corporate and other taxes being applied. The only tax which comes into force from 2018 is the VAT at the rate of 5%.
Criteria for becoming tax resident in the UAE and other countries
As was already outlined in the previous part of our article, to become Dubai, the UAE tax resident as a person you need to receive the country’s residence visa. There are two most common solutions to receive such – over your company registration in the UAE and property purchase.
For a company to be tax resident in the UAE from the UAE perspective, the company must be onshore, and its director has to be a resident of the United Arab Emirates (can be foreign citizen with UAE resident visa).
Validity of TRC
The tax residency certificate is issued on the annual basis and is valid for one year from the date of its issue.
Tax Exemption certificate in the UAE – what is means and its difference to Tax Residency Certificate.
When searching the internet and other sources of information, you may also encounter the term “ Tax Exemption Certificate”. This is the type of certificate which you can get/obtain for the UAE offshore companies. It has different meaning and cannot be considered as a substitute to TRC. The tax exemption certificate states that the company is tax exempt in the UAE, but it is only stating this fact and does not confirm company’s tax residency anywhere.
How to get/obtain TRC Certificate
The application for the Tax Residence / Domicile certificate in Dubai is the procedure in itself. It requires certain documents to be duly prepared, steps to be done and forms to be filed. Thus the most effective way to get is to get in touch with us, and our specialists would provide you full assistance and execute all the steps on your behalf to obtain it.
Most common questions and answers
What is the total time to obtain tax resident certificate?
The certificate can be applied 6 months after you become the UAE resident (obtain your residency visa). Same applied for companies – the application can be done 6 month. It takes approximately one to 2 month to obtain it from the date of all documents application.
Can I receive the certificate for the previous times I have been resident in the UAE?
Yes, this is possible to obtain the TRA certificate retrospectively means covering the previous the time provided you have all the necessary documents.
What exactly does tax residency certificate confirm?
It confirms your status of the tax resident of Dubai or other Emirates of the UAE from the standpoint of the UAE authorities.
Who can obtain the TRC?
Private persons and local companies – free zone and main land
Does it also for the purpose of using the advantages of double tax treaties of the UAE?
Yes, the domicile certificate is one of the most important documents you need to qualify for double tax treaties advantages under the jurisdiction of the UAE.
What is immigration report and when it is required?
The immigration report is the report issued for the purpose to have the proof of your trips to the UAE. It is obtained from the UAE immigration authorities and is one of the documents required for the application for the TRC.
If you need full support on getting your TRC certificate - for private person or company - simply get in touch with us – and our advisors help you with all the steps and documents.