Tax Residency | Tax Domicile Certificate

Tax Residency Certificate
or Tax Domicile Certificate in the UAE

Tax Residency Certificate (TRC) also known as Tax Domicile Certificate is an official document issued by the Tax Authorities in the UAE. It was being issued by the Ministry of Finance (‘MoF’) till 11 November 2020.  According to Cabinet Resolution No. (65) of 2020, from 14 November 2020, Tax Residency Certificate / Tax Domicile Certificate shall be issued by the Federal Tax Authorities (‘FTA’) on an application made by the resident (Individual or incorporated entity) of UAE.

The necessity for a Tax Residency Certificate or Tax Domicile Certificate in the UAE:

• To avail the benefit of Double Tax Avoidance Agreements (DTAA)
•  Ultimate proof to demonstrate that one is a tax resident of the UAE.
• A means of registration with the tax authorities, which would mean updated information exchange from both ends.
   

Who is eligible for a Tax Residency Certificate or Tax Domicile Certificate in the UAE?

In the UAE, the Tax Residency Certificate or Tax Domicile Certificate shall be issued by the FTA from 14 November 2020 to eligible government entities, other legal persons, and individuals. According to our understanding, Resident individuals and Mainland / Free Zone entities in the UAE are eligible to apply for the Tax Residency Certificate or Tax Domicile Certificate in the UAE. Offshore companies may not be eligible to apply for TRC in UAE, as they may not have a physical presence in the UAE.

The Benefits of Obtaining a Tax Residency Certificate

Tax Residency Certificate or Tax Domicile Certificate, issued by a Statutory Authority (in UAE – FTA), is the undisputed document to prove that an entity is a resident of a Tax Residency Certificate or Tax Domicile Certificate issuing country. Tax Authorities across the globe accept Tax Residency Certificate or Tax Domicile Certificate as a reliable document to substantiate the residency of an entity.

This allows the entity to justify the applicability of provisions of DTAAs. Entities can consider tax planning and restructure their business/transactions considering the provisions of DTAA. Favorable provisions of Withholding Tax and Permanent Establishment provide ample opportunity for the businesses to plan tax-efficient structures.

With the purpose of promoting its development goals, the UAE concluded 115 DTAA with most of its trade partners. Thus, there are ample opportunities for tax planning if the residency status is certain for the applicant.
 

The validity of Tax Residency Certificate or Tax Domicile Certificate

The validity of the Tax Residency Certificate or Tax Domicile Certificate is one year from the date of issue. Corporates and individuals can use the Tax Residency Certificate or Tax Domicile Certificate for one specific country at a time. Application for multiple certificates, if required, can also be made.

Obtaining a Tax Residency Certificate or Tax Domicile Certificate in the UAE

Obtaining a Tax Residency Certificate or Tax Domicile Certificate in the UAE requires having a registered user on the ministry website. This implies that one needs the following:

• E-mail
• Mobile number
• Registration of individual/entity in the system

For Individual:

An Individual residing and working in the UAE for at least 183 days, can make an application for Tax Residency Certificate or Tax Domicile Certificate

Documents Required for Tax Residency Certificate or Tax Domicile Certificate

• A copy of Passport and Emirates ID
• Valid residence permit
• A certified copy of the (residential) lease agreement / Tenancy contract
• Bank statement for six months of the required year
• Salary certificate / Income certificate
• Immigration Report: A report from the General Directorate of Residency and Foreigners Affairs mentioning the duration of the person’s stay in UAE (Minimum 183 days)
• Tax forms (if any) from the country where the certificate needs to be submitted

For Legal Person:

The Legal person operating in the country for at least one year can make an application for the Tax Residency Certificate or Tax Domicile Certificate.

Documents Required:

• A copy of valid trade license
• Name of Authorised Signatory for the application, his passport copy, Emirates ID, and Permits of residence (Residence Visa Copy)
• A copy of Articles of Association and Memorandum of Association
• Audited Finacial Statements
• Bank statement for six months of the required year
• A certified copy of the tenancy agreement(Ejari).
• If the certificate required in Special Template, the format of the Template

Fees for the issue of Tax Residency Certificate / Tax Domicile Certificate by FTA:

Cabinet Resolution No. (65) of 2020, specifies the fee for the application for and issuance of Tax Residency Certificate / Tax Domicile Certificates as under:

Sr. No	Service Description	Fee Before 14/11/2020 (AED)	Fee After 14/11/2020 (AED)
1	Submission of application for a Tax Residency Certificate	100 +3 per Application	50 / Application
2	Review of Tax Residency Certificate application and issuance of an electronic certificate to a registrant with the Authority	10,000 or 2,000 depending on the Status	500 / Application
3	Review of Tax Residency Certificate application and issuance of an electronic certificate to a legal person not registered with the Authority	10,000 + 3 Per Application	1,750 / Application
4	Review of Tax Residency Certificate application and issuance of an electronic certificate to a natural person not registered with the Authority	2000 + 3 per Application	1,000 / Application
5	A printed paper copy of the issued electronic Tax Residency Certificate	N.A.	250 / Certificate