Everything you need to know about the Tax Residency Certificate in Dubai
The United Arab Emirates are renowned for their attractive tax environment, offering one of the lowest tax rates in the world. However, to fully benefit from the tax system and avoid double taxation, individuals and businesses must obtain a Tax Residency Certificate (TRC).
The TRC is essential for benefiting from the advantages of the double tax agreements (DTAAs) signed between the United Arab Emirates and another country.
The eligibility criteria for obtaining a TRC have recently been redefined. Under the new regulations, there are now two types of TRC:
- Tax Residency Certificate relating to tax treaties
- Domestic Tax Residency Certificate
Who is eligible to apply for a Certificate of Tax Residence?
The eligibility criteria for obtaining a Certificate of Tax Residence vary depending on whether the applicant is an individual or a company and on the type of CTR required.
Individuals
To be eligible for a CRF under tax treaties, the following requirements must be met:
- Possession of a valid UAE residence visa.
- A copy of the EmiratesID is required to verify the individual's identity.
- A certified copy of the residential tenancy contract to establish proof of residence (EJARI).
- Bank statements: bank-stamped statements for the last six months.
- Proof of income: for example, a salary certificate or income certificate.
- Entry and exit report: issued by the Federal Authority for Identity and Citizenship or a competent local government entity, confirming a presence in the country of more than 183 days.
Domestic CRFs are subject to more flexible day-counting criteria - an entry and exit report issued by the Federal Authority for Identity and Citizenship or a competent local government entity, confirming:
- a presence in the country of more than 183 days; OR
- a presence in the country of more than 90 days during the relevant 12-month period, with a valid UAE residence visa (or being a national of a GCC state), with either a permanent residence OR employment or a business in the UAE;
- a presence in the country of fewer than 90 days, in which case the usual or primary place of residence AND the center of financial and personal interests in the country must be proven.
Companies
Companies established in the United Arab Emirates for at least 12 months are eligible to apply for a CRF for tax treaties. The following requirements must be met:
- Valid trade license.
- A certified copy of the establishment contract is required.
- Information about the shareholders and manager: for example, passports, Emirates IDs, and residence visas.
- Audited financial statements for the past 12 months.
- Bank statements: stamped bank statements for the past six months.
- A certified copy of the lease agreement to establish local substance.
- Tax forms, if applicable, from the country where the certificate must be submitted.
Companies established in the United Arab Emirates for at least 12 months may also apply for a domestic CRF if they meet the following simplified criteria:
- Valid trade license.
- Information about the shareholders and manager: for example, passports, Emirates IDs, and residence visas.
How long is a Certificate of Tax Residence valid?
A CRF issued in the United Arab Emirates is valid for one year from the date of issue.
What are the main benefits of a CRF?
Obtaining a Tax Residency Certificate in the United Arab Emirates offers several advantages for both individuals and businesses:
Avoidance of Double Taxation
Double Tax Avoidance: A CRF allows individuals and businesses to benefit from the advantages of double taxation agreements signed between the United Arab Emirates and another country, thereby avoiding being taxed twice on the same income.
Import-Export Benefits
Import-Export Benefits: It helps take advantage of tax exemptions and benefits related to import-export processes.
Legal Recognition
Legal Recognition: The certificate serves as legal recognition of an individual's or company's tax residency status in the United Arab Emirates.