The United Arab Emirates government has gone to great lengths to welcome and invite foreign nationals. The nation has invested in creating an impressive infrastructure with modern engineering, and has worked hard to create a better, more convenient quality of life for all who come here. To that end, there are lots of good reasons to pursue an UAE tax residency certificate in Dubai if you’re a foreign national.
The Tax Residency Certificate (or TRC) aids the government in determining in which country a person resides for tax purposes. This is generally a requirement for people who stand to generate financial gain from two or more countries. Holding a TRC helps to ensure that no laws are broken, and that no legal consequences will be incurred.
An individual can be a tax resident in one nation, but this doesn’t automatically exclude them from paying taxes in other countries. Some countries, for example, may decide to tax foreigners' earnings regardless of where they file their tax returns.
What is the definition of a tax resident?
The TRC or Tax Residency Certificate is a government-issued document by the Ministry of Finance within the United Arab Emirates. It’s used to determine a company or legal entity's country of tax residence. The certificate is issued either to a UAE-based firm or a UAE-based individual. The certificate is valid for one year, and must be renewed on an annual basis.
What are the objectives of a TRC?
The certificate is issued for the following reasons:
- It supports applicants in avoiding double taxation in two or more countries.
- The TRC is used to establish the applicant's residency in Dubai, UAE.
- It simplifies the method of transnational trade and economic investment.
- It contributes to and helps to further economic diversification for all parties concerned.
- It promotes economic development in Dubai and in the UAE as a whole.
Advantages of tax residency in the UAE
- Automatic protection of tax information exchange
- Opens the door to numerous business opportunities
- Offers IT infrastructure and support of the highest caliber
- Allows for no personal or business income tax in the UAE
- Provides for the benefits of a double taxation agreement
- Ideal for trading with both Eastern and Western countries
- Allows for withdrawals of dividends without charge or penalty
Interested in applying for tax residency in Dubai, UAE?
Here’s a simple outline of the required steps, for your reference:
1. Must have a local UAE residence address
Individuals must possess a UAE residential address, and must identify their source of employment in order to be considered as tax residents.
2. Ensure that you just have a reliable source of income
Because a tax residency certificate (TRC) is required to earn tax resident status in the UAE, it’s necessary to be able to verify a stable source of financial gain.
3. Acquire a bank account in the United Arab Emirates
Individuals must have a current UAE bank account in order to obtain UAE tax residency status.
4. Possess a valid resident visa and present your passport and Emirates ID
Every individual should possess a passport stamped with a resident visa in order to be considered as a tax resident. To be a tax resident, every individual, shareholder, or company manager must be able to present a resident visa. This is open to people in the UAE who have been granted a resident visa and hold an Emirates ID, including those who work, study, make business investments, or choose to retire within the country.
Required documents for submission in order to obtain tax-resident status in the United Arab Emirates:
1. United Arab Emirates Resident Visa
A resident visa can be obtained through a specific employment contract, or by establishing an onshore or offshore business within the UAE.
2. Proof of Billing
The lease agreement or utility bills of any kind can be utilized as proof of residency.
3. Evidence of Earnings or Official Statement of a Bank
It’s necessary to establish a bank account in the country where you plan to receive any income, salary, or earnings.
4. Immigration Report of Residency
An immigration authority in Dubai, UAE, will issue the report, which includes the applicant's passport number, entry/exit dates and points of entry or exit, and other relevant immigration-related information.
5. Tax Residency Certificate
Once all of the relevant documentation has been filed, the Federal Tax Authority can issue a Tax Residency Certificate or TRC.
An individual has the ability to request such a certificate on their own, but this can sometimes be a lengthy and confusing procedure for the novice. But you can avoid all those stresses and frustrations by simply entrusting the task to the pros at MSZ Consultancy! Just send us all the paperwork, and we'll be glad to take care of everything on your behalf! We can help you to procure your TRC in a timely manner. In fact, we can help you with your tax resident status, tax residency certification, and so much more!
Reach out now to book your free consultation! You can give us a call at +971 50 487 2208, or just shoot us an email at info@mszconsultancy.com. Don’t wait, let’s get started today!
Frequently Asked Questions (FAQs)
1. Who is a tax resident?
Tax residents in Dubai, United Arab Emirates are defined as anyone who works and resides in the country. There are a number of ways to obtain tax residency in the UAE. A person who has been in the country for 183 days or longer, and has a valid residence address to confirm their eligibility is one step closer to obtaining tax residency status.
2. Tax Residency Certificate (TRC): how important is it?
The Tax Residency Certificate (TRC) enables the government to determine where an individual resides for tax purposes. This is generally a requirement for anyone who stands to generate measurable income from more than one country. It’s important to secure a TRC in order to ensure that no laws are being broken, and that no unintended legal consequences will be levied against the individual or entity.
3. What are the consequences of failing to file for a TRC?
If a person fails to file for a tax residency certificate, they may be obliged to pay taxes in ALL of the countries where they do business. Failing to make these payments could be considered as tax evasion, and you could face seizure of assets and even imprisonment if you don't comply.
4. Who issues TRCs in the United Arab Emirates?
It’s the Ministry of Finance who handles this in the UAE. A Tax Residence Certificate is a document provided by the UAE Ministry of Finance that verifies the applicant's formal status as a UAE resident under a specific Double Taxation Treaty (DTT) between the UAE and a foreign jurisdiction.
5. What is the purpose of the TRC?
The TRC is required to establish which nation of which you are a resident, for tax purposes. If you’re someone who has (or intends to have) income from multiple countries, then acquiring a TRC may be a necessary step.
6. How long would it take for me to get my UAE Tax Residency Certificate?
The pre-approval process with the Ministry of Finance normally takes only 4 to 5 working days, as long as all essential documentation is in order. It can then take up to 5 working days to provide the TRC after the initial approval has been processed, and all documents have been verified to be accurate.
