Know the Myth And Realities Behind Obtaining A UAE Tax Residence Certificate
Many confusions have transpired around the views and the norms of application for the UAE Tax Residency Certificate. Numerous misinterpretations surround the rules of application for the certificate. Here is a clear picture of applying for the UAE Tax Residence Certificate.
What is a Tax Residence Certificate?
The Tax Residence Certificate (TRC) is a technical document issued by the UAE Ministry of Finance for verifying the applicant’s formal status as a resident of the UAE concerning the Double Taxation Avoidance Agreements (DTAA) between the UAE and specific foreign jurisdiction. Once the DTAA is signed between the two countries, it mandates tax authority to produce a Tax Residence Certificate.
What is a Tax Residence Certificate used for?
A Tax Residence Certificate is an essential and core document that helps the applicant seek the benefits of DTAA.
Can an Individual obtain a TRC, and what requirements are to be fulfilled?
Yes, the individuals can apply for the UAE Tax Residence Certificate but, they are subject to meet the prerequisite conditions applicable.
Here are the conditions to be met by the individuals to obtain the certificate. They have to submit the copies of:
- Passport and valid permit of residence
- Emirates ID card
- Residential lease agreement
- Validated six months bank statement from a local bank
- A valid proof of income in UAE, i.e., Salary certificate
- An immigration report from the GDRFA – exit and entry report stating that he/she stayed in the country for more than 180 days
- Tax forms from the country where the certificate needs to be submitted
Can a company apply for a TRC, and what requirements are to be fulfilled by the corporate entity?
Of course, yes, a corporate entity or company can apply for the UAE Tax Residence Certificate by fulfilling certain conditions. The companies have to submit the copies of:
- Trade licence and partners’ attachment
- Establishment contract certified by the official authorities
- Company owners/ partners/ directors’ passports, IDs and permits of residence
- Certified audited financial accounts of the previous year
- Validated six months bank statement from a local bank
- Certified lease agreement or MOA of the company
- The organizational structure of the company
Is a UAE offshore company entitled to obtain a Tax Residence Certificate?
No. The Ministry of Finance does not issue Tax Residence Certificates for offshore companies as the latter are considered non-resident corporate entities for tax purposes.
How much time will it take to process the application?
The process of obtaining the Tax Residence Certificate in the case of an individual will take about 3-10 days and for corporate entity or companies, it will take not less than 12 working days depending on the approval from the authority.
What is the procedure to apply online for the UAE Tax Residency Certificate?
The applicant should create an online account on the Ministry of Finance (MoF) portal. A tax residence certificate application form is filled out and uploaded alongside the supporting documents for review and approval by the MoF. Once the MoF issues the license, fees are paid electronically, and the certificate is generated and available for collection in person at the Ministry or couriered to a domestic address. The whole process takes about 3-10 days for an individual and not less than 12 working days for companies depending on the approval from the authority.
Misconceptions surrounding the UAE Tax Residence Certificate
Myth #1: An individual must stay in UAE for 180 consecutive days to meet the Ministry of Finance requirements.
It is partially true. The MoF has fixed a prerequisite for an individual applicant to have spent at least 180 days in the UAE within the year preceding the applications for the certificate. This is an objective criterion (day-counting). It is, however, possible to apply or reapply even if this condition is not met by the applicant if they prove to have strong ties to the jurisdiction.
Myth #2: There is no need for a residential address in the UAE
A residential address in the UAE and a valid tenancy contract in the applicant’s name are mandatory conditions to apply for the UAE Tax Residence Certificate.
Myth #3: An applicant can submit international bank account statements as part of their application
The Ministry of Finance will not accept any foreign bank statements. The applicant must have a UAE personal bank account and have held such an account for a minimum of six months. They also require six-monthly statements stamped by the UAE bank. The online generated bank statements are not acceptable.
Myth #4: The Tax Residence Certificate cannot be predated
An individual or a company can acquire backdated Tax Residency Certificates. The Ministry of Finance allows applicants to backdate their Tax Residence Certificate application as long as there is documented proof that the applicant has had a UAE resident visa, six months UAE bank statements, and a residential address for that period.
