One of the main advantages of doing business in the United Arab Emirates is the preferential tax treatment that businesses get. The UAE has a 0% corporate income tax for individuals and legal entities, which is ideal for anyone wanting to own their own business. But, in order to not pay taxes on profits earned here in another country, you will have to apply for a UAE Tax Resident Certificate. This certificate was created because of the Double Tax Avoidance Agreement (DTAA) the UAE and other countries have signed to avoid double taxation. There’s a long list of countries, so you’ll want to make sure you aren’t missing out on these benefits. Keep reading to find out what this certificate is and how your company can get one.
What is a UAE Tax Domicile Certificate?
A Tax Residency Certificate, which is also referred to as a domicile certificate, is an official document that is used by the UAE Ministry of Finance. The certificate confirms that a company or person has a tax resident status in the UAE. Why is this important to have? Authorities and banking institutions around the world consider the UAE Tax Residence Certificates as proof of tax residency in the UAE. This will help ensure that business owners aren’t paying taxes for the same income twice. The certificate helps investors claim the Double Tax Avoidance Agreement benefits in over 75 countries that have signed the treaty.
This isn’t just for companies. Individuals who are a fiscal resident in the UAE for more than 180 days can provide all the required documents to the Federal Tax Authority to also take advantage of the treaty.
Why Do I Need to Get a UAE Tax Residency?
Investors in the UAE can enjoy the best business experience and access to the international market. Having a UAE Tax Resident Certificate is one of those added benefits to the business in the UAE. If you don’t have a Tax Residency UAE Certificate, then you may be subject to double taxes and have to pay taxes in your native country. Here are some other reasons why you may want to look into getting your certificate:
- Confirmed tax residency in UAE imposes no income or corporate tax rate
- There’s a big network of companies that have signed the Double Tax Avoidance Agreement with the UAE
- You earn the right to move freely in the Gulf States
- An individual can avoid income tax
- It can help promote international business
How Do I Get a UAE Tax Residence Certificate?
The requirements for this certificate will depend on which type you will need. Both companies and individuals can apply for this certificate. Here is what you will need:
Required Documents for Tax Residency Certificate for Companies
- Copy of Company Trade License
- Establishment contract certified by official authorities
- Copies of Shareholder’s and Manager’s passports, residence visas, and Emirates ID
- Certified copy of the latest audited financial Statement/Audit Report
- Bank statement from the last 6 months
- Certified copy of Company lease agreement or Tenancy Contract
- If you have any tax forms from the country in which the certificate is to be submitted, you will have to turn those in
Required Documents for Tax Residency Certificate for Individuals
- Passport Copy
- UAE Residence Visa Copy
- Emirates ID Copy
- A certified copy of residential lease agreement or Tenancy Contract Copy
- Latest Salary certificate
- Bank statement from the last 6 months
- A report from the General Directorate of Residency and Foreigners Affairs specifying the number of days the resident has stayed in the UAE
- Tax forms, if there are any, from the country in which the certificate is to be submitted
This certificate is valid for one year after the date that it is issued.
How Can I Get Tax Residency in the UAE?
There are three ways you can get a UAE residence certificate:
- Through an employment contract
- By purchasing property
- By registering a Free Zone company
Registering a company in the Free Zone is the most popular option. One reason it’s the top choice because it allows expatriate shareholders and employees of a company to apply for residency status. Registering a Free Zone company is quick and easy, and you’ll get to enjoy several business bonuses like full exemption from income and corporate tax in UAE, 100% foreign ownership, no exchange restrictions, and more.
Here are the steps you need to take to form your company in the Free Zone:
Registration of a Free Zone (FZ) Company
- Submit an application for approval for your company name
- Submit your business plan along with any other necessary documents to the Free Zone Authority
- Visit UAE to complete the incorporation formalities
- Apply for visas for the owners, company executives, and family members
- As soon as the application for the visa is submitted, you will have to leave the company and re-enter under the residence permit
- After the visa is issued, you will have to return to UAE to complete visa formalities. The UAE resident has to visit the UAE every six months for 1-2 days. The visa is valid for two years.
Advantages of Free Zones
- 0% corporate income tax
- If you operate a business like consulting, management, communications, design, etc., then you won’t need to have a physical office
- You can easily open a personal and corporate bank account in the UAE
- There’s no minimum share capital requirement
- No local partner is needed
- You can get visas for family and employees
- The formation is quick: license within 72 hours, visas within 30 days
The Tax Residency Certificate is not applicable to Offshore companies.
Let MSZ Consultancy Help You Get a UAE Tax Residency
At MSZ Consultancy, we specialize in the business set up in the UAE, and we are familiar with all the formalities that come along with forming a business here. We can guide you through all the paperwork and make sure you have all of the required documents to get your UAE Tax Residency Certificate. We want to make sure you are getting the maximum benefits of doing business in the UAE. We offer company formation and tax consultancy services to help your company see the best results. Contact us today at +971 58 982 7842 for a free consultation on how to get your Tax Residency Certificate.