The UAE has transformed itself in a very short period of time from a country once completely reliant on oil revenue, to one with a diverse economy attracting investment from all around the world.

The Emirates of Dubai and Abu Dhabi, in particular, have now become renowned as centres of international finance embracing the latest technology innovations, as well as developing into attractive tourist destinations with world renowned landmarks and high-class hotels.

Among the many incentives which attract businesses to the UAE is its favourable tax environment. The vast majority of companies that base themselves in the UAE are exempt from income tax. In addition, it has established double taxation agreements with numerous trade partners to ensure that taxes are not imposed twice in two countries on the same taxpayer.

At present, the UAE has 123 double taxation agreements in force or pending. This encourages the free flow of trade and investment from other countries, as well as protecting member countries from double taxation on the exchange of goods, capital and services.

In order to benefit from the double taxation avoidance agreements that the UAE has in place, companies or individuals must be in possession of a Tax Domicile Certificate (TDC), also known as a Tax Residency Certificate (TRC).

For a full list of UAE international double taxation agreements, see the Federal Tax Authority page below: 
https://www.tax.gov.ae/en/TRC

What is a Tax Residency Certificate?

A Tax Residency Certificate is a document issued by the UAE Federal Tax Authority (FTA) to a company operating in the country to establish tax residency and allow it to benefit from the double taxation avoidance agreements.

The Tax Residency Certificate is open to any company operating on the mainland or in a Freezone that has been active in the country for at least a year. Offshore companies are ineligible from this and must receive a tax exemption certificate instead of the Tax Residency Certificate.

As well as business entities, the Tax Residency Certificate is also available to individuals who have resided in the UAE for at least 180 days and who wish to establish tax residency in the country. This is particularly beneficial for individuals whose native countries do not have a double taxation agreement with the UAE. The individuals must have a valid UAE resident visa for more than 180 days to apply.

What are the requirements to obtain the Tax Residency Certificate?

The requirements to obtain a Tax Residency Certificate are distinct for an individual compared to a corporate entity. The steps in both cases are detailed below:

Requirements for an individual to obtain the Tax Residency Certificate in the UAE

The following documents are required:

• Passport copy and valid visa copy issued at least 180 days earlier
• Emirates ID copy
• 6 months of personal UAE bank statements, stamped by the bank
• Proof of income in UAE – e.g. employment agreement, share certificate, salary certificate
• A report from the General Directorate of Residency and Foreign Affairs (GDRFA), showing evidence of all entries into and exits from the UAE
• A copy of certified tenancy contract or title deed, valid for at least three months prior to application

The Tax Residency Certificate application fees are AED 2000, payable to the FTA. These fees must be paid through UAE e-Dirham Card.

Requirements for a company to obtain Tax Residency Certificate in the UAE

The following documents are required:

• Valid UAE Trade Licence – Mainland DED or Freezone – the company must have been active for over 1 year
• A copy of MOA (Memorandum of Association) for the company
• A copy of the Certificate of Incumbency for the company – normally the Chamber of Commerce certificate
• The Organisational chart structure of the company
• Certified commercial tenancy contract copy or title deed - valid for at least three months prior to application, a physical office space is mandatory (virtual office space will not be sufficient)
• Passport, valid UAE resident visa copy and Emirates ID of the company directors, shareholders or managers
• Latest certified audited financial statement or UAE company bank statements from the last 6 months, stamped by the bank

The Tax Residency Certificate application fees for a company are AED 10,000, payable to the FTA, paid through e-Dirham Card.

What is the process for obtaining the Tax Residency Certificate?

1. Create an account on the payable to the FTA portal
2. Complete the application form
3. Attach the required documents in PDF or JPEG format
4. Your application and attached documents will be verified and if they meet the criteria, you’ll receive email confirmation and be asked to pay the remaining fees via the system
5. After payment confirmation, you’ll receive the certificate via express courier

How long does it take to obtain the UAE Tax Residency Certificate?

Subject to all the relevant documents being in place, the pre-approval process with FTA usually takes 4 to 5 working days. Following pre-approval and confirmation that all documents are correct the FTA then take up to a further 5 working days to issue the tax residency certificate.

The Tax Residency Certificate / Tax Domicile Certificate has a validity period of 1 year, and can then be renewed each year, subject to resubmission and renewal process.

What are the benefits in obtaining a UAE Tax Residency Certificate?

Investors in the UAE benefit from access international markets when setting up a business in Dubai or Abu Dhabi. The added benefit of being a Tax Resident in UAE and obtaining the UAE Tax Residency Certificate is to avoid double taxation and receive tax incentives by being a resident in the UAE. Individuals and companies are permitted to obtain separate UAE Tax Residency Certificate certificates which allows income to be covered both for the individual and the corporate level.

Effective tax planning should be supported by an overall view of your business structure and individual circumstance, and we recommend you always seek professional tax advice, combined with accounting and finance support to ensure that your corporate structure, and individual situation is in line with tax rules to get the maximum benefit from UAE tax residency.

How can PRO Partner Group help?

PRO Partner Group (PPG) have direct access to government departments and can help you fully with the process for acquisition of the TDC and any other regulatory approvals and licences. If you need assistance to obtain a Tax Residency Certificate as an individual or a company in the UAE, or for any other related company setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman or Qatar, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at info@propartnergroup.com or complete the contact form below and we will be delighted to assist you.