Apply for a UAE Tax Residency Certificate: Steps to follow
As the UAE continues to grow its economy and industrial sector, more foreign investors choose it as their main place to do business, the tax benefits of this nation are one of the many advantages that it offers. But, to obtain the greatest benefits of the local tax system, you must have a UAE Tax Residency Certificate. On Connect Services Middle East, we love sharing our experts’ knowledge to make this path easier for you. In this article, you will learn about what this document is and why you should obtain it. The UAE has signed agreements to avoid double taxation with other countries to ensure that the same taxpayer is not taxed twice in two different countries, which turns out to be a very important advantage when establishing a company with significant capital in the UAE. We invite you to join us and explore the following points in more detail: 1. What is a UAE Tax Residency Certificate? Among the advantages of having a company in the UAE is that by registering a company in a free zone, the entrepreneur can obtain a UAE Tax Certificate. In simple words, a UAE Tax Residency Certificate is a document from the Ministry of Finance that certifies the residence of a natural or legal person. The tax residence certificate is meant for any resident company that carries out its commercial activities in the country, including free zone companies, such as businesses operating in the continental territory. This means that the company can take full advantage of the benefits resulting from the treaties to avoid double taxation. The main objective of this document is to confirm that the United Arab Emirates is the legal residence of the person or company; meaning that they will not have to pay taxes on the earnings generated in the nation. You should note that this advantage does not apply to offshore companies, also known as International Business Companies (IBC). Instead, these businesses may be eligible to receive a tax-exempt certificate. 2. Why should you apply for this certificate? Knowing the definition of Tax Residence Certificate, these are the main advantages of having this document: As mentioned above, an entrepreneur in the UAE can avoid double taxation between the UAE and their country. This will prevent them from paying taxes generated in their country of origin. When setting up a business in the UAE, it is an essential requirement to have a tax residence certificate in order to access international markets. In the case of the United States, its legislation establishes that citizens and those with permanent residence must pay taxes whether or not they reside in the country. If the same year you paid the taxes, you became a resident of the UAE, you can claim this payment. In general terms, the main advantage sought is to avoid double taxation, and to achieve this two conditions must be met: That the foreign entrepreneur obtains the tax residence certificate in the UAE. That the foreign entrepreneur is originally from a country with which the UAE has signed an agreement that avoids double taxation. 3. How to apply for a UAE Tax Residency Certificate? First of all, remember that both natural and legal persons can obtain this certificate and that the TDC serves as official ratification before the competent body on the fiscal residence of a natural or legal person in the UAE. The process will vary depending on whether the individual is a natural or legal person. However, both are subject to meeting specific requirements. 3.1 Requirements for natural persons Copy of the applicant’s valid passport. Copy of UAE residence visa. Copy of Emirates ID. Bank movements of the last six months in the UAE. Valid certification document in the UAE. For example, a contract, or salary certification. Immigration report. Copy of the lease agreement or home ownership title. 3.2 Requirements for Companies Companies must also meet certain conditions and provide specific documents before opting to obtain a Tax Residence Certificate. To prevent an extended process and financial losses, they must always ensure that they meet all the requirements. Copy of valid trade license. Lease contract or property title of a commercial establishment of a minimum of three months before making the request. Copy of the valid passport of the company’s legal representative. Copy of the visa and Emirates ID of the company’s director/manager. The latest audited financial statement containing the bank movements of the UAE company for the last six months; stamped by the bank. The documents will be submitted together with the application to the Ministry of Finance. If the application is approved, they will issue a Tax Residence Certificate in a period of approximately three weeks. 4. Steps to apply for this document To make the request, you must visit the Federal Tax Administration website. Then, complete the registration form. 4.1 Create a Tax Certificate account for new users First, you must register on the website and create a new account. Keep in mind that you will need to enter the following information: Email address. Name. Username. Address. ZIP code. Key code. Password. Security code. Security response. Answer suggestion. 4.2 Access The user will be directed to the login page where the username and password will be requested. When logged in, the user can see the status of the request. Also, the user will be shown the following statuses for the submitted request: Draft: This means the form has not been completed or submitted. Draft awaiting payment: The user has reached the payment stage but it has not been made. Pending: Submitted and awaiting approval. To be processed within 3 days. Returned: This means that it is necessary to provide more information or documentation. Pending payment: Here, the request was approved, and you must pay the corresponding fee to download the certificate. Issued: The process was completed successfully and the certificate was issued. Rejected: The request was rejected due to not fulfilling all the requirements. 5. Eligibility criteria The eligibility criteria to obtain a
