What is Tax Residency Certificate (TRC)?

Since UAE follows residency-based taxation, where resident entities are taxed with respect to their worldwide income, double taxation may occur where income is taxed in both the source country and resident country. To avoid this UAE has entered into Double Taxation Avoidance Agreement (DTAA) with multiple countries.

An updated list of DTAs can be found on the Ministry of Finance’s website at:

https://mof.gov.ae/wp-content/uploads/2023/08/Avoidance-of-Double-Taxation-Agreements1.pdf

Public and private companies, investment firms, air transport firms and other companies operating in the UAE, as well as other types of UAE residents, may benefit from Avoidance of Double Taxation Agreements (“DTA”).

In order to benefit from a DTA, a person generally requires to provide a TRC to prove that the person is resident in another country and subject to tax in that country. The TRC is a certificate issued for eligible government entities, companies and individuals to take advantage of agreements of double taxation avoidance on income to which the UAE is a signatory.

Eligibility Criteria:

Natural persons

The applicant must have been a resident of the UAE for at least 180 days. Also an annual lease agreement officially documented by the competent authorities, such as EJARI in Dubai, municipalities in other Emirates and free zone authorities must be attached to the application.

The following documents are required for individual TRC applications:

• Passport Copy
• UAE Residence Visa Copy
• Emirates ID Copy
• A certified copy of (residential) lease agreement or Tenancy Contract Copy (an annual lease agreement officially documented by the competent authorities, such as EJARI in Dubai, municipalities in other Emirates and free zone authorities)
• Source of income (e.g. Salary Certificate, Trade License etc)
• Validated bank statements for 6 months from a local UAE Bank.
• A report from the General Directorate of Residency and Foreigners Affairs or Federal Authority for Identity and Citizenship (ICA) specifying the number of days the resident has stayed in the UAE (The applicant must have been a resident of the UAE for at least 180 days).
• Tax forms (if any) from the country in which the certificate is to be submitted. If the Tax form requires FTA Signature and Stamp, the user is requested to send the original form to FTA via courier with return service. The applicant should fill and sign the fields related to his details and information for FTA to attest the form.

Legal persons

In order to be eligible to apply for a TRC, the legal person must have been established for a period of at least one year. Financial accounts must be audited or prepared by an accredited audit firm and attached with other required documents to the application. The report must be certified and stamped by the audit firm. The audited financial report to be attached to the application must cover the year for which the certificate is requested. If the certificate is requested for the present year, the audit report must be covering the past year.

The following documents are required for individual TRC applications:

• A copy of the trade license and directors/shareholders’ attachment.
• Establishment contract certified by official authorities (if it is not a Sole Company).
• A copy of the legal person’s owners/partners/directors’ passports
• A copy of the legal person’s owners/partners/directors’ Emirates IDs
• A copy of the legal person’s owners/partners/directors’ permits of residence
• A certified copy of the audited financial accounts (Financial accounts must be audited or prepared and stamped by an accredited audit firm and must cover the year for which the certificate is requested. If the certificate is requested for the present year, the audit report must be covering the past year).
• Validated bank statements for 6 months from a local UAE Bank.
• A certified copy of the lease agreement.
• Tax forms (if any) from the country in which the certificate is to be submitted. If the Tax form requires FTA Signature and Stamp, the user is requested to send the original form to FTA.

How can Digits help you?

Digits has competent tax experts who can assist you in your tax-related activities such as tax registration, correspondences with FTA, obtaining certificates, determining tax treatments, tax accounting, formatting tax invoices, preparing tax returns, calculation of outstanding tax, filing of tax returns, tax record maintenance, periodic tax reviews, compliance checks, understanding the recent developments in tax regulation, arranging training sessions for employees, tax planning, assessing the impact of tax on cash flows, compiling tax policies and procedures, ensuring adequate internal controls in tax-related processes, tax system implementation, preparing files for FTA audits and more such functions ensuring compliance with the tax rules.

This brings us to the conclusion of the discussion on tax residency certificates under UAE law. Do you need help in obtaining a Tax Residency Certificate? Feel free to contact Digits.