UAE - Individuals who spend 183 or more days in the UAE during a year are considered tax residents. They can obtain Tax Residency Certificates (TRCs) and benefit from Double Tax Avoidance Agreements (DTAA) signed by the UAE with a number of countries.
According to the Federal Tax Authority website, it takes about 45 minutes to submit an application. The TRC is valid for one year from the beginning of the financial year selected by the applicant.
The Ministry of Finance recently issued a decision, clarifying rules on determination of tax residency.
For instance, tax residents do not need to own a permanent place of residence, but “such place must be continuously available to them”. It also specifies that all days or parts of a day in which an individual is physically present in the UAE will be counted in determining the 183-day threshold.
Experts have highlighted how the country has a very straightforward domestic tax residency regime. It is designed to ensure that individuals who live and work in the UAE are subject to fair and equitable taxation, said Dariush Soudi, founder of advisory firm Arena Consultancy. He added that TRCs will help ensure that residents of the UAE are not subject to double taxation.
Arun Leslie John, chief market analyst, Century Financial, said for those investing in overseas jurisdictions, availing of the benefits of double tax agreements is of great interest. “This is particularly true for countries with which the UAE has strong trade ties.”
Step-by-step process to get a TRC, costs
According to John, applicants can follow this process to obtain a certificate:
1. Create an account on the Federal Tax Authority (FTA) website.
2. After logging in, click on the ‘Services’ tab.
3. Click on ‘Certificates’ in the drop-down menu.
4. Click on ‘Request for Tax Residency Certificate’.
5. This will open up an application form. Fill in all details such as name, Emirates ID number, tax registration number, contact details, etc.
6. Upload all required documents like copies of passport, Emirates ID, tenancy contract, and utility bill, to name a few.
7. It is crucial to review all the details in the application are accurate and up to date before submitting.
8. After clicking on ‘Submit’, the user will be directed to a payment gateway. A processing fee will be charged.
9. Upon receiving your application, the FTA will review it thoroughly. If they grant an approval, the individual will be issued a TRC within a few days.
10. This certificate will be sent by email but will also be available for download in the individual’s FTA account.
“The process might vary slightly depending on the type of individual or entity applying for the TRC,” said John.
The cost is Dh50 for submission, Dh500 for all tax registrants, Dh1,000 for non-tax registrant natural persons and Dh1,750 for non-tax registrant legal persons.
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