Businesses must adhere to a number of conditions in order to be in compliance with national and international tax laws. The Tax Residency Certificate (TRC), also known as the Tax Domicile Certificate, verifies the nation in which a business or other legal entity resides for tax purposes. We’ll offer you an overview of the Tax Residency Certificate in this post, discuss the advantages of setting up your tax residency in Dubai, and detail the requirements for both people and businesses. Let’s start now.
What does the Tax Resident Status Certificate mean?
A person resident in the UAE or a company incorporated in the UAE would have their tax residency declared by the Tax Residency Certificate, an official document issued by the UAE Ministry of Finance. Your tax residency certificate will be valid for a year after it is issued.
A Tax Residency Certificate may be obtained if a Free Zone or Mainland company is registered in the UAE. However, offshore businesses, sometimes referred to as IBCs, are not eligible to file for a TRC; instead, they can obtain a Tax Exemption Certificate. The advantages of acquiring your residency in Dubai include the following:
- To avoid paying income taxes in your home country, you can benefit from the double taxation avoidance agreements between the UAE and your nation.
- However, be aware that regardless of whether a person lives in the US or not, the US compels all citizens and permanent residents to file tax returns.
- You can use this certificate to demonstrate your tax residency for proper compliance if your country of residence is a member of the CRS.
- If you paid your taxes in the same year that you became a UAE tax resident, you are eligible to reclaim them.
- By ensuring equality for all taxpayers, businesses, and people, you can safeguard the country’s economy.
Requirements for tax residency certification
As previously mentioned, both residents of the UAE and corporations with legal presence there are eligible to apply for a Tax Residency Certificate. People from nations like the United States that do not have a double tax avoidance pact with the UAE can notably benefit from it. The TRC acts as the formal declaration of a person’s or a legal entity’s tax residency in the United Arab Emirates. Depending on whether the certificate of tax residence is for an individual or a firm, different conditions apply.
The following qualifications must be met by applicants for the TRC:
- A photocopy of your passport.
- A replica of your UAE residency permit.
- Your Emirates ID copy
- UAE bank statements for the last six months.
- A valid UAE income document (such as a salary certificate or employment contract)
- Report on immigration.
- Title deed or tenancy agreement (certified copy)
Prior to receiving a Tax Residency Certificate, businesses must also fulfill a number of requirements. Before applying, it’s crucial to confirm that you meet all the conditions. If you don’t, your application can be turned down.
The following criteria must be met by businesses seeking the TRC:
- A replica of the business’s active business license.
- Lease or title deed, which must have been in force for at least three months prior to application.
- Space for offices.
- A photocopy of your passport.
- Director or Manager of the Company’s copy of visa and Emirates ID.
- The most recent financial statement that has been audited and includes the company’s UAE bank statements for the last six months (with the bank’s stamp).