UAE Tax Residency Certificate

Tax Residency Certificate

Contact our business setup and company formation experts at Vigor Business Solutions to find out more about it and how we can help you in obtaining this certificate.

1- What is a tax residency certificate?

A tax residency certificate, known in Arabic as a ru’yah ta/limiyya (لوكية تائ/لمى), is issued by the Ministry of Finance in the UAE. It confirms your country of tax residence and is issued to companies and individuals who are residing in the UAE. It is a key requirement for certain company, property, visa, and related transactions. The Tax Residency/Domicile Certificate provides official confirmation of a company's/legal entity's tax residency and domicile in the UAE. Tax residency causes the location where profits are taxed on a worldwide basis rather than just from the UAE. You can request a tax residency certificate for an individual or company. The certificate confirms the country of tax residence as the UAE for an individual, and as the UAE or any other country specified by the applicant on behalf of the company. Tax residency certificates are issued to companies and individuals who have established genuine commercial or residential businesses in the UAE. Upon issuance of this certificate, the validity of this tax residency certificate is one year only and has to be renewed with the help of our Vigor Business Setup Consultants.

2- What is the purpose of Tax Residency Certificate?

A resident company operating in the region, such as a free zone company or a business operating on the mainland, is issued a tax residence certificate, which allows the company to completely benefit from double taxation avoidance treaties. The tax residence certificate is issued for an indefinite period, provided that its holder does not lose its tax residence status in any country. The tax authorities grant a Tax Residence Certificate to a resident company working in the country, such as a Free Zone Company or a business operating on the mainland, allowing it to completely benefit from Double Taxation Avoidance Agreements (DTAA). For example, An Emirati Tax Residence Certificate can be issued to a foreign company that is registered in the UAE as a Free Zone company or located on the mainland. This certificate allows the foreign company to be considered - for tax purposes - a UAE resident and thus utilise double taxation avoidance treaties that may be applicable between the UAE government and its counterpart in the organization's country of origin.

3- Is tax Residency Certificate limited anywhere? Who will issue tax residency certificate?

The tax residence certificate is issued by the Ministry of Finance to companies who have a physical presence in the country. Free Zone companies that do not have a UAE Tax Residence Certificate can benefit from a deductible license fee as an alternative to taxation. These fees are sure to be lower than paying corporate income tax, which would be imposed if no tax residence certificate was obtained.

4- How do I get a tax residency certificate in the UAE?

This certificate is equivalent to a personal tax residence certificate and allows resident companies in the UAE to avoid paying taxes locally. In other words, Free Zone companies that are the beneficiaries of this tax certificate are not required to pay any corporate income taxes or service charges on behalf of their shareholders. It is worth mentioning that this tax residency certificate has a wider scope of applicability than a similar document in other countries.

5- What are benefits of having tax residency certificate in the UAE?

The UAE has many double taxation avoidance agreements and favorable tax conventions with many countries. By taking advantage of these agreements there are opportunities to avoid paying income taxes back home. While the US does not have a double taxation agreement with the UAE, it does have a tax treaty that may be able to minimize your tax liability back in the United States. If you paid your taxes in the same year that you were a UAE tax resident, you will claim back taxes which ensuring justice for all taxpayers, businesses, and people, as well as preserve the national economy.

6- What are the documents required for a personal tax residence certificate?

Our in-house premium business setup consultants in UAE will help you guide through the entire process without any hassle. All you have to do is submit the required documents and our company formation agents will process on your behalf while taking a nominal fee. The documents required to process Tax residency certificate for an individual are as below:- 

  • Copy of your valid passport
  • Copy of your UAE residence visa
  • Copy of your Emirates ID
  • Six months of UAE bank statements. 
  • Valid proof of income in the UAE (i.e., employment agreement, salary certificate, etc.)
  • Immigration report
  • Tenancy agreement or title deed (certified copy)
7- Can companies also apply for Tax Residency Certificate?

Yes, companies established in UAE can also apply for the same certificate. it is important to note that a company has to meet specific requirements in order to be classified as a tax resident prior to receiving the tax certificate. Tax residents of any country are subject to national income taxation on the part of its income earned in those countries. A company needs to verify if it is qualified prior applying for one. Once the company can verify that they qualify, the tax resident certificate has to be requested through a Form T102 . The application form has to include all the business information of the applicant, such as address, legal structure, contact information, etc. The application also includes the list of exempt goods and services provided by the company, which is usually done during an audit. Tax Residency Certificate (TRC) is a one-year tax residency certificate for both permanent and non-permanent companies. Below are list of some documents which are mandatory for processing your request:- 

  • Copy of the company’s valid trade license in UAE. 
  • Tenancy agreement or title deed (this should be valid for a minimum of three months before the application)
  • Proof of Physical office space
  • Valid passport copy
  • Copy of visa and Emirates ID of the company’s Director/Manager
  • An audited latest financial statement that has or the company’s UAE bank statements for the last six months (should be stamped by the bank)