How to get a Tax Residency Certificate (TRC) in Dubai, UAE?

[ Updated in December 2019 ]

What is a tax residency certificate, and what is it for?

Before going into details on tax residency certificates (TRC), we must first define what it really means. A tax residency (domicile) certificate is the document confirming that a company or a private person has a tax resident status in the UAE from the viewpoint of local authorities. That is, a company or an individual receives income in this country and pays taxes here at the local rate (almost in all cases 0%). In a modern world, the place of profit is no longer limited to the country of business registration, or native country of a person, since the sources of profit can be anywhere around the world. At the same time, each country seeks to receive its income by taxing its residents. In order not to pay several fees for the same income, double taxation treaties were once concluded between the countries. A tax residency certificate is required to confirm the fact of receiving income in another country to the tax authority of your country, that is, you can use the double tax treaty in practice.

Surely, people want to minimize their deductions and, therefore, often choose such countries for business registration that provide minimal tax burden. The UAE with its 0% income tax for individuals and legal entities is ideal for anyone in this regard. But in order not to pay taxes on profits earned here in another country, you must first apply for a UAE tax resident certificate. The Ministry of Finances (MOF) of the United Arad Emirates deals with these issues here. Here are some of the countries, which have signed a Double Tax Avoidance Agreement (DTAA) with the UAE:

Before considering the issue of obtaining a tax residency (domicile) certificate, you must make sure that your country is on the list of those with which the UAE has signed a bilateral Double Taxation Agreement (DTT). You can find the full list of countries here. If your country is not on the list of those who have signed a Double Taxation Treaty, this document does not give you anything. You will still have to pay taxes on the income received in the UAE in your native country.

When are you considered a tax resident of the UAE, and what can he give you?

A tax or fiscal residency (and an appropriate certificate) is given in case a specific set of rules and requirements are fulfilled, and these are different from country to country. The most common international regulations on tax residency state that to be a fiscal resident in a given country, you need to spend more than 180 days in that country. This can bring you to the conclusion that if you spend less than 180 days in such jurisdiction, 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 for a year, there are some other factors. Among the other highly important factors influencing the possibility of obtaining a tax residency certificate are the following: location of income source, real estate property and any other links to a country.

For example, you spend in Dubai or any other Emirate of the UAE more than 180 days and have a villa here, but your business is in France, and your family lives mostly in France as well. In this case, you are considered both a tax resident of the UAE (as a real estate owner) and a French tax resident (since your income is in France). There is a double taxation avoidance agreement between the UAE and France, you can get a tax residence certificate in the UAE, but you still have to pay taxes from your business in France with French tax rates. Therefore, a tax resident certificate will not always be useful to you.

The UAE tax residency certificate can be received by physical persons as well as companies. In the case of physical persons, the main criteria are the UAE resident visa and documents confirming that you actually live in the country (documents for house rental and utility bills). As for legal persons – only free zone companies (onshore) and local companies registered on the mainland are considered to be tax residents. Offshore companies are not tax residents of the country (and not provide the possibility to obtain residency for their directors/shareholders).

The main reason why people strive to get such a certificate is the almost complete absence of taxes on all types of income that you receive in the country. That is, in most cases, when you receive income in the UAE, you can legally not pay tax either here (0% tax rate) or in your home country.

In 2018, the UAE implemented automatic data exchange system among banks and tax authorities (Common reporting standard). According to this agreement, banks are required to establish jurisdiction in which a client is a tax resident and send information about a bank account of such person there. Thus, if you plan to take the opportunity not to pay tax twice, you must make out TRC, since information about your income in the UAE may be sent to the tax office of your country. Up-to-date information on the agreement and lists of countries participating in the exchange of financial information can be found on the official website OECD

Documents required to obtain a tax residence certificate

For physical Persons who officially work in the UAE*:

1. Application from an individual;
2. Copy of passport, Emirates ID and residence visa;
3. Copy of the rental contract, or utility bill for the last 6 months (to confirm the fact of residence);
4. Bank statement (for the last 6 months);
5. Certificate from the General Directorate of Foreign Affairs and Residency indicating the number of days spent by a resident in the UAE (must be at least 6 months);
6. Documents confirming the payment of the contribution (the service costs 2,000 dirhams).

* A person must work in the country for at least 6 months.

For legal entities*:

1. Application from a legal entity (signed by its director);
2. Copy of passport, Emirates ID and residence permit of a director;
3. Valid license (trade, service, production, or another license type);
4. Memorandum of Association;
5. Lease agreement for an office, warehouse or other premises, or land plot;
6. Bank statement (for the last 6 months);
7. Audit Report on the financial condition of the company (copy);
8. Documents confirming the payment of the contribution (the service costs 10,000 dirhams);

* A company must work for at least 1 year.

For individuals – real estate owners*:

(a document may be required in foreign banks and financial institutions to confirm the residence of the UAE)

1. Resident visa;
2. Bank statement confirming the existence of a bank account in the UAE;
3. Proof of real estate ownership;
4. Utility bills.

* The document can be issued immediately after receiving a residence visa. It is issued by an accredited auditor.

A tax resident certificate is issued by the UAE Ministry of Finance and is intended for the tax authorities of one particular country in which a person plans to confirm their tax residency in the UAE. The certificate is valid for 1 year.

FAQs

1. What is the total time to obtain a tax resident certificate?

   The certificate can be applied 6 months after you become the UAE resident (obtain your residency visa). As for companies – the application can be made in 12 months. It takes approximately one to two months to obtain it from the date of all documents application.

2. Can I receive the certificate for the previous times I have been a resident in the UAE?

   Yes, the possibility to obtain the TRC certificate retrospectively means covering the previous time provided you have all the necessary documents.

3. What exactly does a 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.

4. Who can obtain the TRC?

   Private persons and local companies – free zone and mainland

5. 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.

6. What is the immigration report, and when it is required?

   The immigration report is the report issued to provide 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 tax residency certificate TRC - for private person or company - simply get in touch with us – and our advisors help you with all the steps and documents.