Taxation in the United Arab Emirates
In an era of globalization, businesses are no longer restricted to a single geographical territory and are spread across the globe. As total income is contributed by different countries, each country wishes to tax the global income of its residents and the profits earned on its land. In order to curb double taxation and ensure that the business owners are not paying tax for the same income twice, countries like UAE have entered into Double Tax Avoidance Agreement (DTAA). Once DTAA is signed between two countries, it mandates tax authority to produce a tax residence certificate, which helps investors, individual residents claim the treaty benefits.
Double Tax Avoidance Agreement (DTAA)
UAE's Double Taxation Treaty (DTT) or DTAA is a bilateral agreement that preserves and upholds the interests of foreign investors and companies coming from other taxable jurisdictions, and investing in UAE. Any foreign company or national already paying taxes abroad for the profits earned in his/her business can mitigate any potential tax burden in the UAE as a result of this treaty. Investing in UAE is 100% tax-free, and the government does not impose any taxes through DTT on the business owners planning to set up their business in UAE.
Not just the Companies, but individuals who are fiscal resident in the UAE for more than 180 days and can provide the documents requested by the Federal Tax Authority (FTA) are eligible to use the advantages of the treaty.
Note - Earlier the issuance of Tax Residency Certificate (TRC) in the UAE was governed by the Ministry of Finance (MoF). As of 14th November 2020, the Federal Tax Authority (FTA) has begun receiving applications for the issuance of TRC via its e-services.
UAE has signed Double Taxation Avoidance Agreement or Double Taxation Treaty (DTT) with the following countries:
|Bosnia and Herzegovina||Brunei||Bulgaria||Canada|
|Philippines||Poland||Portugal||Republic of Moldova|
|South Africa||Spain||Sri Lanka||Sudan|
|The Republic of Paraguay||Tunisia||Turkey||Turkmenistan|
How to Get a Tax Residency Certificate in Dubai/Abu Dhabi, UAE
Tax Residency Certificate in UAE is also known as “Tax Domicile Certificate”. It is issued by the Federal Tax Authority (FTA) the governing body, to take advantage of the double taxation avoidance agreements signed between the foreign jurisdictions and the UAE. The FTA, issues Commercial Activities Certificate to enable applicants to refund the VAT paid in advance outside the UAE, whether or not DTAAs are applicable.
There are certain criteria to obtain Tax Residence Certificate in UAE, these are:
Eligibility for Tax Residence Certificate in Dubai
- A company operating in UAE mainland
- Free zone company
- An individual investor/business owner
- An employed individual
- Branch of a foreign company
- Offshore company
- A non-employed individual (with a spouse visa)
Requirements to Avail Tax Residence Certificate
- Copy of a valid trade license copy
- Copy of a valid lease contract or tenancy contract
- Copy of the passport and residence visa of the authorized signatory (Manager/Director/Owner)
- Copy of Emirates ID for the authorized signatory (Manager/Director/Owner)
- Certified bank statement of an AED account for the last 6 months
- Audited financial statement
- A valid copy of passport and visa
- Bank statement for the last 6 months
- Certified tenancy contract with Ejari (RERA) attestation/title deed
- Salary certificate
- Immigration (entry and exit) report of residency
The validity of a Tax Residence certificate is for 1 year.
Note: Dates can be chosen based on your requirement.
How Long Does the Process Take?
The process of issuing a tax residency certificate takes approximately 1 week to approve the application.
Obtaining TRC in UAE through Our Hassle-free Service | Commitbiz
Commitbiz has vast experience in offering professional tax planning and structuring services for international clients and also helps entrepreneurs and firms in starting a business in Dubai through company registration, incorporation, and legal consulting services... We can help you with the following:
- Suggesting the right investment structure that adds value to your business
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- Using the right jurisdiction and double taxation agreements to optimize your taxes and reduce withholding taxes on income, inheritance, capital gains, etc.
- Processing all statutory filings
- Meeting all regulatory tax requirements
If you need any help with tax residency certificate, feel free to contact us. We'll be glad to assist you.
1. Which authority issued the tax residency certificate in Dubai?
The UAE Federal Tax Authority (FDA).
2. Why is a tax residency certificate in Dubai essential?
To get benefits from the double taxation policy in Dubai.
3. When can a person apply for the tax residency certificate in Dubai?
After staying for at least 180 days in the emirate.
4. How long does it take to obtain a tax residency certificate?
5. For how long does a tax residency certificate stay valid in Dubai?