Tax Residency Certificate UAE
One of the many benefits of establishing a company in the UAE is the favorable business policies. The United Arab Emirates has a 0% corporate income tax for individuals and legal bodies which is beneficial to people and entrepreneurs seeking to establish a business in the UAE. However, to avoid paying taxes on profits earned in the United Arab Emirates in other countries, you may need to apply for a UAE Tax Resident Certificate. The certificate was created due to the Double Tax Avoidance Agreement(DTAA) that the UAE and other countries have signed to avoid double taxation which can be also be done by obtaining a tax residency certificate UAE.
A UAE Tax Domicile Certificate also referred to as a tax residency certificate is a legally recognized document used by the UAE Ministry of Finance to confirm that a company or an individual has a tax resident status in the UAE. This certificate is particularly crucial to have as authorities and banking institutions all over the world consider it as proof of tax residency in the UAE. Investors can also claim the tax avoidance benefits in the over 75 countries that have signed the treaty. This helps ensure that business owners do not pay taxes for the same income twice. The UAE Tax Certificate is valid one year after its issuance.
What are the benefits of a UAE Tax Domicile Certificate?
- Having a UAE Tax Domicile Certificate gives you the right to move freely in the Gulf States
- Having a UAE Tax Domicile Certificate helps you to avoid income tax
- So, having a UAE Tax Domicile Certificate helps promote international business.
- It gives you access to the large network of companies that have signed the Double Tax Avoidance Agreement
- A confirmed tax residency in UAE spares you from income or corporate tax rate
What are the documents required to get a Tax Residency Certificate for companies?
- A copy of the company trade license
- A bank statement from the last 6 months
- A certified copy of the latest audited financial statement/audit report
- Passport copies of shareholders and managers
- The residence visas and Emirates ID of the shareholders and managers.
- A copy of the company’s trade license
- A certified copy of the company’s lease agreement or the tenancy contract
- An establishment contract certified by official authorities.
- A certified copy of the latest audit report
What are the documents required from an individual to get a Tax Residency certificate?
- A passport copy
- A copy of the individual’s Emirates ID
- A bank statement from the last 6 months
- The latest salary certificate of the individual
- A certified copy of the individual’s tenancy contract.
- A report from the General Directorate of Residency and Foreigners Affairs(GDFRA) indicates the number of days the resident has stayed in the UAE.
How can I get a tax residency in the UAE?
One can obtain a UAE residence certificate in three ways. They include:
- By buying property
- By registering a free zone company
- Through an employment contract
Oftentimes, people choose the option of registering a free zone company because it gives shareholders and employees from other countries the opportunity to apply for residency status. It is a quick process that provides you with total foreign ownership of your company, exemption from exchange restrictions and complete exemption from income and corporate tax.
How do I register a free zone company?
- You are required to submit an application to receive approval for your company name
- Then, you are required to submit your business plan and other important documents.
- You are required to visit the UAE to complete all formalities in the incorporation process.
- Now, You are required to apply for visas for the company executives.
- Once the visa application is on, you are mandated to leave the UAE and re-enter under the residence permit.
- Once the visa is issued, you will have to return to the UAE to complete all formalities.
The UAE resident visa is valid for two years and the UAE resident is mandated to visit the UAE every six months for 1-2 days. You can learn more about establishing a free zone company here.
It is important to know that the Tax Residency Certificate is not applicable to offshore companies.