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In UAE, securing a Tax Residency Certificate (TRC) in Dubai holds significant importance for both individuals and corporations. This certificate serves as proof of tax residency status in the UAE, offering various benefits such as exemption from income taxes and facilitating international trade. Understanding the process and requirements for obtaining a TRC is essential for those seeking to establish their tax residency in Dubai.
Importance of TRC in Dubai
The TRC provides legal recognition and facilitates compliance with tax regulations. It offers exemptions from individual and corporate income taxes and enables businesses to claim exemptions or tax credit on foreign-sourced income through Double Tax Avoidance Agreements (DTAA). Additionally, the TRC simplifies import-export processes by exempting businesses from additional taxes, facilitating international trade relations. Holding a TRC enhances business credibility in global transactions, indicating compliance and reliability.
The TRC is an important document for multinational enterprises having presence in the UAE as well as high net-worth individuals and their families residing in multiple countries.
Eligibility Criteria
Legal entities seeking a TRC for treaty purposes must have been established in the UAE for at least one year. Branches of foreign companies and offshore entities are ineligible for a TRC due to lack of establishment in the UAE.
Natural persons applying for a TRC may apply based on their duration of stay in the UAE, falling into categories of above 183 days or between 90 and 183 days.
Procedure for Obtaining a TRC
The process of obtaining a TRC involves several steps that individuals and corporations must follow meticulously. The application is made online by uploading the requisite documents and payment of the prescribed fees. The required documents for obtaining a TRC vary for individuals and corporations.
For individuals, essential documents include a salary certificate, bank statements, lease agreements, and copies of passports, UAE residence visas, and Emirates IDs. Additionally, entry/exit reports from the General Directorate of Residency and Foreign Affairs (GDRFA) are necessary to validate the applicant's presence in the country.
Corporations seeking a TRC must submit documents such as their Certificate of Incorporation, organizational charts, passports of directors/shareholders/managers, valid UAE residency visas, audited financial accounts or bank statements for the last six months, Memorandum of Association, and valid UAE trade licenses. It is pertinent to note that a recently established company should have completed one year of operation before being eligible to apply for the TRC.
For more information, please see FTA’s guidance on Issuance of Tax Certificates (Tax residency and commercial activities certificates).
Validity and Duration
TRC issued by the FTA is valid for one year from the date of issue, after which it must be renewed to maintain tax residency status in the UAE. Generally, the TRC does not extend to cover future periods from the selected start date, except for government entities.
Conclusion
In conclusion, obtaining a TRC in Dubai is essential for individuals and corporations seeking to establish their tax residency status in the UAE. By following the prescribed procedures and submitting the required documents, entities can benefit from the numerous advantages offered by the TRC, including tax exemptions and facilitation of international trade.
Disclaimer: Content posted is for informational and knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/interpretation of the publisher is based on the available Law, guidelines and information. Each reader should take due professional care before you act after reading the contents of that article/post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.
