UAE has a long list of benefits to tax residents. To avail of it you must get a tax residency or domicile certificate often known as (TRC). Expats need to become a Dubai Tax Resident. That’s why we created today’s guide to help you understand the complexities, benefits, and importance of this tax residency system.
So, buckle up your sleeves and stay with us to know more.
What is a Tax Residency Certificate in Dubai?
The Federal Tax Authority of the UAE (FTA) issues a Tax Residency Certificate or TRC. It is used to confirm an individual’s or company’s tax residency within the UAE.
A TRC’s primary goal is to allow individuals and businesses to benefit from Double Taxation-Avoidance Agreements (DTAAs). These agreements reduce the risk of two countries taxing the same income twice.
Whether you have a mainland or free zone business in Dubai, you must get a Tax residency certificate. A company owner from an offshore location is not eligible. He must obtain a Tax Exemption Certificate in place of a TRC.
Benefits of a Tax Residency Certificate in UAE:
Following are the key benefits once you become a tax resident in Dubai, UAE.
- It avoids double taxation (individual’s own country and UAE) on the income of a businessman.
- TRC holders can get Double Taxation Avoidance Agreements (DTAAs) that help reduce tax liabilities.
- It serves as official proof of tax residency in the UAE, that can be used for various legal and financial purposes.
- It simply reduced the chances of tax disputes.
- You might be eligible for tax exemption (Only if meet the criteria)
Types of Tax Residency Certificates in Dubai?
There are two types of TRCs.
- Domestic TRC: This type of TRC confirms your tax residency status within the UAE for domestic purposes. It can be used for various reasons, such as claiming tax deductions, exemptions, or reliefs under UAE tax laws
- RC for Treaty Purposes: It is specifically issued to enable you to claim benefits under Double Taxation Avoidance Agreements (DTAAs) between the UAE and your home country.
It’s essential to specify the purpose for which you need the TRC when applying. Later, the FTA will determine the appropriate type of certificate to issue.
How to get a Tax Residency Certificate in Dubai?
The process to get a tax residency certificate in Dubai is straightforward. It just needs a few of your minutes. Here is a step-by-step guide on it.
- Gather your necessary documents as mentioned above.
- Visit the official website of the UAE Federal Tax Authority (FTA).
- Look for the “Services” section and find the option related to “Issuance of Tax Certificates”
- If you are not already registered then create your FTA account first. Just follow the on-screen instructions.
- Next log in to your FTA account.
- Initiate the TRC application process and select the type of TRC you need.
- Fill in the necessary details about yourself or your company. It usually includes personal information, tax details, and contact information.
- Upload the required documents as specified in the application form.
- There might be fees associated with the TRC application. Follow the instructions on the FTA portal to make the payment.
- Once you’ve completed all the sections and uploaded the documents, double-check all the filled information and submit your TRC application.
When you get your tax residency certificate in Dubai, it will be valid for 1 year only which is non-extendable. However, if you are a government entity, you might be eligible for it.
Additionally, it would take only 5 to 6 business working days to receive a tax residency certificate in Dubai.
How long do you need to stay in Dubai to be a tax resident?
A general rule of thumb is to stay in UAE for a minimum of 12 months or 183 days. However, this rule has some exceptions too that are as follows.
- The 90-day rule applies to UAE citizens, GCC nationals with permanent residency in the UAE, or GCC nationals who hold a valid UAE resident permit. If you have spent 90 days in the UAE in 12 months, you will be considered a tax residence.
- If your primary residence is in the UAE and you have financial interests there, then you may be considered to be a resident for tax purposes.
Remember, that tax laws can be complex, and these are general guidelines. For a definitive answer to your specific situation, it’s highly recommended to get tax consultancy in the UAE. HM Corporate can be your partner along the way and can help navigate the complexities more efficiently.
What is proof of tax residency in UAE?
The Federal Tax Authority will issue you a Tax Residency Certificate (TRC) that will act as your primary proof. This is an official document and is eligible to confirm your tax residency status.
Suppose, you’re in the process of obtaining a TRC or if you meet the criteria but haven’t applied for a certificate yet. What would you do?
Well, other documents can also be used as supporting evidence of tax residency.
These include:
- Passport with UAE residence visa.
- Your Emirates ID.
- Proof of income such as salary certificate.
- A bank statement proving your financial activity within the UAE.
- You can also use your entry or exit steps to prove your tax residency.
Ready to Become a Tax Resident?
We hope this guide gave you detailed insights on becoming a Dubai Tax Resident. However, if you have still any confusion, comment below or reach out to us today. The expert team of HM Corporate also provides corporate tax services to help you manage complexities with ease.
