What is a Tax Residency Certificate
The United Arab Emirates Tax Residency Certificate (TRC), also known as a tax domicile certificate, is a certificate issued by the Federal Tax Authority (FTA) of the United Arab Emirates in accordance with the provisions of agreements aimed at avoiding double taxation. This document allows all government entities, companies, and individuals who meet the eligibility criteria to benefit from these double taxation avoidance agreements on income generated in Dubai and signed by the United Arab Emirates.This certificate is valid for one year and may be issued upon request to individuals as well as companies.
Companies or individuals must hold a Tax Residency Certificate (TRC) in order to benefit from the UAE's double taxation avoidance agreements.
Different types of Tax Residency Certificate
The TRC may be requested by individuals and legal entities.- Individual: an individual may wish to benefit from the tax agreements signed by the Emirates (for example, to receive dividends from a foreign company and benefit from a reduced withholding tax rate), which is why they would request this certificate;
- Company: as a company, if you need a TRC, you must have conducted business in the UAE for at least one year.
In summary, the first applies to the individual income of a resident, while the second applies to companies resident in the UAE.
Note that an offshore company cannot apply for a TRC because, by definition, this type of company cannot have a physical presence in the United Arab Emirates.
Why apply for a TRC?
Several public and private entities operating in the UAE benefit from double taxation avoidance agreements (DTAs). Thus, in order to promote their development objectives, the UAE has concluded 137 Double Taxation Agreements with its trading partners.
Once the DTAs have been signed, companies and individuals may apply for a UAE Tax Residency Certificate (TRC). Many foreign investors also apply for a UAE Tax Residency Certificate to protect their interests.
This certificate was established for specific purposes, namely:
- First, it serves as proof that the applicant is a resident of the United Arab Emirates;
- Second, it enables the applicant to avoid paying taxes in two different countries;
- It also helps facilitate trade and investment flows
- And finally, it helps promote the Emirates' development objectives.
What documents are required to obtain it?
If you wish to apply for a TRC, you will need to gather a certain number of documents. We have listed them for you: – Copy of a valid passport and residence visa; – Copy of your Emirates ID, also known as the Emirates identity card; – Six months of personal bank statements from the UAE, certified by the bank; – Proof of income in the UAE, for example, an employment contract, share certificate, or salary certificate; – Immigration Services report confirming all entries into and exits from the country; – Certified copy of an EJARI (tenancy contract) or title deed. More details here: Get your TRC with MerrittHow does our Merritt firm assist you?
This document is not free, and if you wish to apply for it, fees will have to be paid to the relevant authorities.
Our team can assist you if necessary, and the cost of our assistance will be AED 1500.
If you would like more information about the Tax Residency Certificate in the Emirates, please contact us by email at the following address: support@merritt.group
