It might be confusing for some people what tax residence certificate in UAE. Or how it is connect to double taxation or even what double taxation means. In this article, it will discuss the information that you need to know regarding tax residency certificate. And a bit of history of double taxation.
We are in an era where many businesses spread across the world. In this sense, those businesses are not simply tax in one place but in jurisdictions where they located. Each country has decided to charge tax to the global income of their residents. To ensure that these business people are not paying double the tax that they should pay, countries entered into Double Tax Avoidance Agreement (DTAA). When two countries have a signed DTAA between them, their residents and investors can claim the benefits of the agreement through the tax residence certificate after implementation of VAT in UAE that will be given to them.
Tax Residency Certificate Defined
Tax residency certificate is what a country gives to the business owners and investors in its territory when agreements signed with various countries. It is consider as a specialized document. That gives the residents an opportunity to take advantage of the Double Taxation Treaty (DTT). The residents will have the benefits that come with the implementation of the UAE’s Double Taxation Treaty. It basically exists to protect and endorse the businessmen, entrepreneurs, organizations, investors’ interests as they come from other jurisdictions or countries.
All individuals and onshore and free zone companies are allowed to claim the Tax Residency Certificate as long as certain conditions are fulfilled by them. However, the UAE’s Ministry of Finance does not allow the offshore companies to have the Tax Residency Certificate as they are not consider to be residents of the country.
For individuals, as mentioned above, conditions needed to fulfilled before one should apply for a Tax Residence Certificate. Listed below is the requirements that necessary to met by them in order to obtain the Tax Residency Certificate:
Requirements to obtain the Tax Residency Certificate
- Valid passport and visa copies issued at least before 180 days of expiration
- Emirates ID copy
- Six-month UAE bank statement (should stamped by the bank)
- Valid proof of income in the UAE (e.g., employment agreement, salary certificate, etc.)
- Immigration report (shows the recorded entries of coming in and going out of the UAE)
- Tenancy agreement or title deed (certified copy, it should be valid for a minimum of three months before the application)
- Payment for the application fees of AED 2,000 + AED 3 through the e-Dirham card
For companies, there are also certain requirements that they need to meet before they can obtain a Tax Residency Certificate. An organization cannot simply request for the certificate without checking. If they qualify since their application might rejected if they do not follow the needed requirements. Below is the list of the conditions that companies are require to fulfill:
List of the conditions that companies are require to fulfill:
- Copy of the company’s valid trade license
- Tenancy agreement or title deed certified copy (this should be valid for a minimum of three months before the application) vat in UAE
- Physical office space not a flexi desk
- Valid passport
- Copy of visa and Emirates ID of the company Director/Manager
- A latest financial statement that have certifiably audited or the company’s UAE bank statements for the last six months (should stamped by the bank)
- Application fees of AED 10,000 + AED 10 should paid by the applicant through e-Dirham Card
Steps in Applying Online for the UAE Tax Residency Certificate
Once you have checked and verified that you meet the requirements that needed to be fulfilled to ensure that you indeed obtain a Tax Residency Certificate. You can go ahead and visit the Ministry of Finance’s portal. This is where you can find the application for the Tax Residency Certificate. It needs to filled precisely with the correct information about you or your company. Along with the application, the website might ask for additional documents to support your application. This will review by the Ministry of Finance and will approve by them as well.
Payment will not make on the same day that you pass your request for Tax Residency Certificate. Fees will only pay by the applicant once the Ministry of Finance approved it. It then can be pay to the online payment portal. The individual who has applied for the tax domicile certificate can collect it at the Ministry of Finance. In the same way, it can also be sent by the Ministry through a courier that the applicant has given to the authority.
It should be noted that since the extensive review is made for each application, the whole process can take 2-4 weeks.