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Tax Residency and Double Taxation Benefits in the UAE
The UAE has transformed from an oil-dependent economy into a global hub for business, finance, and tourism. With its diverse economy, modern infrastructure, and investor-friendly policies, it attracts businesses and individuals from around the world.
Dubai and Abu Dhabi, as leading international financial centers, embrace the latest technologies and boast world-renowned landmarks and luxury hospitality, making the UAE a preferred destination for professionals and investors.
Tax Domicile Certificates (TDC) / Tax Residency Certificates (TRC)
Tax Domicile Certificates (TDC), also known as Tax Residency Certificates (TRCs), are required for companies or individuals to benefit from the UAE's double taxation avoidance agreements.
What is a Tax Residency Certificate?
Individuals (Formally known as Natural Person) operating in the UAE may utilize the double taxation avoidance agreements by obtaining a Tax Residency Certificate issued by the UAE Federal Tax Authority (FTA).
Residents of the UAE who have lived there for at least 180 days and want to establish tax residency can apply for a Tax Residency Certificate. Those whose native country does not have a double taxation agreement with the UAE will benefit from this opportunity.
Requirements to Obtain the Tax Residency Certificate by a Natural Person
- An individual's requirements for obtaining a Tax Residency Certificate differ from those of a corporation.
- To receive a Tax Residency Certificate in the UAE, an individual must fulfill the following requirements:
- A copy of your passport and a copy of your valid visa issued at least 180 days ago.
- Copy of Emirates ID.
- An official stamp from the bank on six months' worth of personal UAE bank statements.
- The employment agreement, share certificates, and salary certificates - all of which prove income in the UAE.
- Detailed information about all UAE entries and exits can be found in a report from the General Directorate of Residency and Foreign Affairs (GDRFA).
- Prior to application, a certified copy of the tenancy contract or Ejari must be provided.
Requirements for Companies to Obtain the Tax Residency Certificate
- For a legal entity (Company) to apply for a Tax Residency Certificate, the following documents are required:
- A copy of the trade license and the directors'/shareholders' contact information.
- An official establishment certificate (if it is not a sole proprietorship).
- Copies of the passports, Emirates IDs, and residence permits of the owners/partners/directors of the legal entity.
- An audited financial statement certified by the auditor for the past financial year.
- Bank statements from a UAE bank for the past six months.
- Certified copies of the lease agreement (Ejari).
- Tax forms (if any) from the country where the certificate will be submitted. These forms requiring FTA signatures and stamps must be submitted in their original form.
Timeframe for Obtaining the UAETax Residency Certificate
A preapproval process with the FTA typically takes four to five business days if all necessary documents are available. However, it can take up to five working days for the FTA to issue the Tax Residency Certificate after pre-approval and confirmation that all documents are correct.
Upon resubmission and renewal, the Tax Residency Certificate / Tax Domicile Certificate will be valid for another year.
Goals of a Tax Residency Certificate
- The TRC serves the following purposes:
- Determine Tax Residency Status: Certify the tax residency status of individuals or companies.
- Prevent Double Taxation: Avoid taxation on the same income or capital in two countries.
- Comply with International Regulations: Align with international tax standards, including the Base Erosion and Profit Shifting (BEPS) initiative.
- Professional PRO services.
Benefits of a UAE Tax Residency Certificate
- Access to Tax Treaties: Benefit from reduced withholding tax rates on dividends, interest, and royalties.
- Avoidance of Double Taxation: Save costs by avoiding duplicate taxation.
- Ease of Doing Business: Simplify processes such as opening bank accounts and obtaining residency visas.
- Increased Credibility: Enhance trust with banks, investors, and business partners.
- Reduced Tax Liability: Leverage exemptions or reduced tax rates under the UAE’s tax treaties.
How Can JS corporate Help?
JS corporate solutions has direct access to government departments and can assist you with acquiring the TDC and any other regulatory approvals and licenses. In addition, we can help you obtain a Tax Residency Certificate in the UAE as an individual or a company, or with any other company setup, restructuring, local partner, or PRO support matter in the UAE.