Due to increased pressure of tax authorities, tax payers—both individuals and companies—can be asked for proof of their residence. The most substantial of type of proof is a declaration by the government that indeed a person is resident.

A tax residence certificate is such a statement. It is issued when a government considers a person has met certain qualifications.

A tax residence certificate is sometimes one of the administrative requirements that needs to be met before the state that the person is based can grant benefits of a treaty, for example.

Advantages of Obtaining Tax Domicile Certificates

Tax domicile residency certificates allows to completely utilize the benefits of the extensive double tax treaties network the UAE has signed with a lot of countries from different parts of the world.

DTAA or double tax treaty (DTT) is a bi-lateral agreement between UAE and other countries that preserves and upholds the interests of foreign investors and companies from other jurisdictions in an effort to invest in UAE. As a result of this treaty, any foreign company already paying taxes abroad for the profits earned from his/her business can mitigate any potential tax burden in the UAE.
Not just the Companies, but individuals who residents in UAE and complying with the Ministry of Finance guideline are eligible to use the advantages.

Tax Residence Certificate Process

Tax residence certificates are quite definitive proof of tax residency. Moreover, they could offer significant tax savings to a tax payer. Often, at the “expense” of friendly nations with whom the UAE signed a tax treaty. Therefore, TRCs aren't handed out easily, and some substance is required.

The tax residence certificate is issued by the Ministry of Finance of UAE. The certificate can be issued to a company registered in the UAE and also for individuals who are residing in the UAE. The Tax residency certificate validity is for one year.

It is important to check beforehand, when one is going to rely on a treaty, whether the source state imposes this requirement and what the policy of the UAE Ministry of Finance is regarding the issue of tax residence certificates in the context of this treaty. For instance, the Ministry does not issue tax residence certificates for international companies, but it does issue for mainland and free zone entities.

Tax Residence Certificates for Free Zone Companies

A further possibility available to a FTZ is to issue residence permits and obtain tax residence certificates from the UAE authorities for its foreign owners and executives. A FTZ company, must have physical presence in the UAE and, in that respect, it must own or hire premises.

If only a small office is required as the company will be used by its foreign owners mainly for residency purposes the most cost effective options are available by free zones in the northern emirates, notably Hamriyah and Ajman free zones. Physical presence options include “flexi desks” or “flexi offices”.

Furthermore, and if a local bank account is maintained with some movements, the foreign owners and executives can apply to the Ministry of Finance to receive UAE tax residence certificates. A UAE residence permit and a tax residence certificate can be useful to many foreign owners and executives of FTZs who wish to register tax residency in the UAE. It is worth noting, that banking institutions in UAE and many outside consider UAE tax residence certificates as sufficient proof of tax residency in the UAE. As in all cases, the advice of a competent tax lawyer must be sought.
 

Required Documents for Obtaining Tax Domicile Certificate

 For Individuals

1.  Passport Copy
2.  Valid Residence Copy
3.  Certified Tenancy Contract / Title Deed.
4.  Certified bank statement for at least 6 months during the required year.
5.  Source of Income/Salary Certificate.
6.  Immigration Report of residency (Exit & Entry report)

For Corporate

1. Valid Trade License.
2. Certified Articles of establishment; incorporation; founding; institutionalizing or Memorandum of association.
3. Copy of identity card for the Company Owners or partners or directors.
4. Copy of passport for the Company Owners or partners or directors.
5. Copy of Residential Visa for the company owners or partners or directors
6. Certified bank statement for at least 6 months during the required year.
7. Certified Tenancy Contract / Title Deed.
8. Certified audited report.

 
The above requirements are straightforward and the process application takes approximately 1 week to complete. Basically, documents required are produced internally by the company, no outside confirmations needed. No need for any external verification and the movement in the AED bank account does not need to be substantial.

As far as requirement 8) is concerned, our experience is that a simple statement is required which we can arrange with an authorized auditor to sign and stamp, with competitive fees.



Let us know if you are interested in obtaining a Tax Residence Certificate by contacting us...