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As of now, business activities in the UAE are supporting international trade links, yet it likewise gets convoluted once it gets caught in the tax regime. Thus, businesses are presently handling the issue of twofold tax assessment. To straighten out this issue, a Tax Residency Certificate in UAE comes into existence.
A Tax Residency Certificate in UAE sometimes called Tax Domicile Certificate (TDC) is issued by the Ministry of Finance (MOF), International Financial Relations and Organizations Department conferring eligibility to government entities, companies, and individuals to benefit from the treaties of double taxation avoidance of the UAE with its other global counterparts.
If a person resides in the UAE for at least 180 days he can apply for the UAE Residency Certificate. The non-residents cannot apply for this certificate.
Companies functioning in the UAE for at least the past year can apply for the certificate.
Before going into details on Tax Residency Certificates (TRC), we essentially first need to define what it means.
A Tax Residency (Domicile) Certificate is a document issued by the UAE Ministry of Finance evidencing the applicant’s (individual/company) formal status as a UAE resident in respect to a particular Double Taxation Avoidance Agreement (“DTT”) between the UAE and specific foreign jurisdiction.
In a modern world, the place of profit is no longer limited to the country of business registration, or native country of a person, since the sources of profit can be anywhere around the world. At the same time, each country seeks to receive its income by taxing its residents. In order not to pay several fees for the same income, double taxation treaties were once concluded between the countries. A tax residency certificate is required to confirm the fact of receiving income in another country to the tax authority of your country, that is, you can use the double tax treaty in practice.
Surely, people want to minimise their deductions and, hence, often choose such countries for business registration that provide minimal tax burden. The UAE with its 0% income tax for individuals and legal entities is ideal for anyone in this regard. But in order not to pay taxes on profits earned in UAE, you must first apply for a UAE Tax Resident Certificate. The Ministry of Finances (MOF) of the United Arad Emirates deals with these issues here.
Before considering the issue of obtaining a tax residency (domicile) certificate, you must make sure that your country is on the list of those with which the UAE has signed a bilateral Double Taxation Agreement (DTT). You can find the full list of countries here. If your country is not on the list of those who have signed a Double Taxation Treaty, this document does not give you anything. You will still have to pay taxes on the income received in the UAE in your native country.
THE PROCEDURAL STEPS INVOLVED ISSUANCE OF TAX RESIDENCY CERTIFICATE/TAX DOMICILE CERTIFICATE BY FTA IN UAE ARE:
The Tax Residence Certificate by FTA (Federal Tax Authority) has a one-year validity period from the date of issue. The Tax Residency Certificate, also known as the Tax Domicile Certificate, can be used by corporations and individuals. Additional certificate applications can also be filed subjected to unique needs.
Tax Residency Certificates are restricted for offshore corporations; ergo, they would need to get a tax exemption certificate.
To apply for Tax Domicile Certificates, the company must have exercised its activity in the UAE for at least one year.
Documents Required For Companies To Get An Issuance Of Tax Residency Certificate / Tax Domicile Certificate By FTA In UAE Are:
FOR INDIVIDUALS
To apply for an Issuance of Tax Residency Certificate / Tax Domicile Certificate by FTA individuals must have been a resident in the UAE for at least 180 days. The certificate is not granted to non-residents.
THE DOCUMENTS REQUIRED FOR INDIVIDUAL ISSUANCE OF TAX RESIDENCY CERTIFICATE / TAX DOMICILE CERTIFICATE BY FTA IN UAE ARE:
Investors in Dubai can benefit significantly from their access to the international market after company formation in UAE. The benefits of being a Tax Resident in the UAE are many and include:
Effective tax planning with a multidisciplinary approach supported by strong business knowledge, accounting and finance structures, and fundamental tax rules are a necessity to get the maximum benefits out of the Tax Residency Certificate in the UAE. Considering this fact, it is always prudent to outsource one of the best professional and experienced services in UAE for the same.