Are you aware that businesses must meet several requirements to comply with local and international tax regulations? This article examines the Tax Residence Certificate (TRC) or Tax Domicile Certificate (TDC).
What is a Tax Residency Certificate?
For a TRC to be granted, a legal entity must have existed for at least one year. In addition, an audited financial report must be attached to the application. If requested, the audit report must include the past year.
Note: Due to the Double Taxation Avoidance Agreement, offshore companies are not eligible to apply for the TRC
How Can I Get a Tax Residency Certificate in Dubai or the UAE?
Tax residency certificates are not exclusively for entities; individuals living in the UAE can also obtain them. For people from countries like the United States that don't have a double tax avoidance treaty with the UAE, it's especially beneficial. Obtaining a TDC confirms a person's or legal entity's resident status in the UAE.
The process for obtaining a tax residency certificate differs depending on whether it is for an individual or a company, but both groups are subject to several requirements.
To apply for TRC status, the Company (formally known as Legal Person) must submit the following documents:
- An attachment containing a copy of the trade license and the directors'/shareholders' contact information.
- An official establishment certificate (if it is not a sole proprietorship).
- A copy of the passports of the owners/partners/directors of the legal person
- Emirates IDs of owners/partners/directors of the legal entity
- Permits of residence of the owners/partners/directors of the legal entity
- An audited financial statement certified by the auditor
- Bank statements from a UAE bank for the past 6 months.
- Copies of the lease agreement that have been certified.
- Please provide tax forms (if any) from the country to which the certificate will be submitted. Tax forms that require FTA signatures and stamps must be submitted to FTA in their original form.
Applicants who are government entities:
- An original copy of the Decree or Certificate of Incorporation.
- Letter of request from the government entity (the person).
The Ministry of Finance will conduct the compliance procedure upon receiving the documents and applications, and the Tax Residency Certificate will follow within two to three weeks.
Need Help Getting the Certificate?
With exceptional experience in tax planning and complying with Economic Substance Requirements in the UAE, AMCA offers outstanding services.
Among our services are the following:
- Filing, completing, and submitting all legal documents
- Providing assistance with all tax requirements
- Choosing the proper tax structure for your business in the UAE (offshore, free zone, or mainland)
Please do not hesitate to contact us if you are interested in any of these services.
What are the Goals of a Tax Residency Certificate
The United Arab Emirates (UAE) introduced the Tax Residency Certificate (TRC) in 2017 to align with international tax practices and regulations. The TRC is a document issued by the UAE's Federal Tax Authority (FTA) that certifies an individual or a company's tax residency status. The primary goals of the TRC are as follows:
To determine an individual or company's tax residency status: A tax residency certificate is a document that certifies the tax residency status of an individual or a company in a particular country. The TRC helps the UAE government determine whether an individual or company is eligible for tax benefits or exemptions based on their tax residency status.
To prevent double taxation: The TRC also helps prevent double taxation, which occurs when an individual or company is taxed twice on the same income or capital in two countries. By providing proof of tax residency in the UAE, individuals and companies can claim tax benefits and avoid being taxed twice on the same income or capital.
To comply with international tax regulations: The UAE is committed to complying with international tax regulations, including the Base Erosion and Profit Shifting (BEPS) initiative, which aims to prevent multinational companies from shifting profits to low-tax jurisdictions to avoid paying taxes. The TRC is one way the UAE is demonstrating its commitment to these initiatives.
What are the Advantages of Having a UAE Tax Residency Certificate?
There are several advantages to having a UAE Tax Residency Certificate, including:
Access to Tax Treaties: The UAE has entered into double taxation treaties with several countries, including the UK, the US, and India, among others. By having a TRC, individuals and companies can claim benefits under these treaties, such as reduced withholding tax rates on dividends, interest, and royalties.
Avoidance of Double Taxation: The TRC helps individuals and companies avoid being taxed twice on the same income or capital in two countries. This can result in significant cost savings for businesses and individuals who operate across borders.
Ease of Doing Business: A TRC can simplify business in the UAE. For example, opening a bank account, renting a property, or obtaining a residency visa may be easier.
Increased Credibility: Holding a TRC can increase an individual or company's credibility with banks, investors, and other business partners, as it demonstrates that they have a valid tax residency status in the UAE.
Reduced Tax Liability: By having a TRC, individuals and companies may be eligible for tax exemptions or reduced tax rates in the UAE, resulting in a lower tax liability.
Overall, the TRC is an essential document for individuals and companies operating in the UAE who wish to take advantage of the country's tax regime and comply with international tax regulations.
What documents are essential in order to gain tax-resident status in the United Arab Emirates?
Obtaining tax-resident status requires the submission of certain documents and information. Our role as a responsible party requires us to ensure all documentation adheres to UAE law. For more information about the documents required to gain tax-resident status in the UAE, contact one of our advisors.
Frequently Asked Questions
What is TRC for a legal person in UAE?
TRC stands for Tax Residence Certificate, a document issued by the UAE government to confirm the tax residency status of a legal entity.
Who can apply for a TRC?
Any legal entity registered in the UAE and meeting certain tax residency criteria can apply for a TRC.
What are the requirements for obtaining a TRC?
The requirements vary depending on the specific circumstances of the legal entity. Generally, they include proof of tax residency in the UAE, such as lease agreements or utility bills, as well as financial statements and other documentation.