Tax Residency Certificate
Tax Residency Certificate in Dubai, UAE
The present world of business believes in carrying business activities on a global platform. Cross-culture business activities are booming to a great extent. This enhances the trade relations between nations but at the same time, it faces an issue when it gets trapped in the webbing of tax. Now, at this point, the business entities face the issue of double taxation during the import-export procedure. The thought of solving this task gave rise to a tax residence certificate, also known as a tax domicile certificate. This certificate is called as a residence certificate as it acts as a proof of residence. It is beneficial for both individuals and business organizations to obtain this certificate. For business purposes, the UAE Government has started issuing this certificate to take advantage of the Double Tax Treaty (DTT) and convert the threat to a business opportunity. Before proceeding ahead towards the procedures, eligibility criteria, first, let’s understand what a double tax treaty really means.
A double tax treaty is an agreement that is signed between two countries in order to avoid the tax part that they need to pay during the import-export process while carrying business activities. Many countries throughout the world have entered into this agreement with their business countries to avoid a range of taxes like an import-export tax, income tax, inheritance tax, value-added tax, etc. So we can consider the domicile or tax residence certificate as a double tax avoidance agreement (DTAA).
The certificate is issued for the following reasons:
- It helps applicants avoid paying taxes in two or more countries.
- It proves that the applicant is residing in the UAE.
- It makes the process of cross-border trade and investment easier.
- It helps diversify the economy.
It encourages development in the UAE.
Why is it important?
It helps the government know which country a person is a tax resident of. This is mandatory mainly for those who earn incomes from two or more countries. It is crucial as it ensures that one does not break any laws and face legal ramifications.
If a person does not apply for a tax residency certificate, they could be forced to pay the tax for all the countries they operate in. Failure to make the payment could be counted as tax evasion and may result in asset seizure and imprisonment.
A person can be a tax resident in one country, and it has to be noted that it does not always exempt them from taxes in others. For example, some countries do tax income earned by foreigners regardless of where their tax residence is.
How to apply for it?
Individuals can apply for the certificate by themselves; however, this can be a time-consuming process. You can submit the documents to us, and we will handle the rest of the application process on your behalf. Our team is equipped with thorough knowledge of the process. We will deliver the certificate to you within a short period.
As we have seen, a tax residency certificate is issued in order to gain an advantage of double taxation. In order to obtain the certificate, there are certain criteria that need to be fulfilled by both individuals and corporates. Let’s see who all can obtain a domicile certificate:
- Any company operating in Dubai mainland is eligible
- Any free zone company
- An employed individual
- Corporates having a track record of more than 36 months
To obtain a tax residency certificate, an online process needs to be followed by the applicant. The steps include:
- Create an online account in the Ministry of Finance (MoF) portal
- Fill out the application to obtain UAE Tax Residence Certificate
- Once the application is approved, payment needs to be done online
In order to receive a tax residency certificate, certain essential documents need to be presented, and those differ for individuals and corporates. Let’s have a look at the documents required:
- A valid passport and visa
- Bank statement for last 6 months
- Certified tenancy contract with RERA attestation
- Salary Certificate
- Immigration certificate that includes entry and exit report
- Trade license copy
- Lease contract
- Passport and visa of authorized signatory
- Emirates ID of owner
- The organizational structure of the company
- Bank statements of last 6 months
- Audited financial statements
A certain sum of money needs to be paid to obtain a tax residency certificate in UAE to ease the business process. The entire payments that are involved in the process of obtaining a domicile certificate are required to be paid through an e-Dirham Card.
Investing in a business in UAE holds a great opportunity. As we have got a basic idea that why a tax residence certificate is required, now let’s understand the importance of obtaining this certificate:
- It confirms the status of a person or a company in the Emirates
- For individuals who hold a tax residence certificate, except the real income tax, the rate of tax is zero
- It facilitates exchange of information
- A tax residency certificate avoids double taxation during the import-export process
- It leads to a strengthening of trade relations between countries
- It fosters international trade to a great extent
GSPU is a business consultancy firm in Dubai that has been dealing with multiple phases of company accounting and taxation services all over the world. Understanding businesses and framing the accounting and taxation structure, and delivering services on time is one of our key business activities. We have got numerous satisfied clients across the globe with a wide range of business. Our team of experts will help you to achieve the domicile certificate as per your business needs. To get your domicile certificate today, do contact us. We would be happy to assist.
A minimum duration of 2 weeks is required for application approval, and 2 weeks for delivery of the domicile certificate.
The validity period of tax residency certificate in UAE is 1 year.
For Individuals, Government Fee is AED 2,209.
For Corporates, Government Fee is AED 10,209.
Note: Professional fee for assistance will be additional.
No, an offshore company in UAE can’t hold a tax residency certificate.