Tax Residency Certificates: An Introduction
What is a tax residency certificate? That’s a great question! This certificate, also known as a tax domicile certificate, confirms the country of tax residence for a particular company or legal entity. This certificate is typically issued to companies and individuals that reside in one of Dubai’s many Free Zones and is valid for one year from the date of issuance.
However, this tax residency certificate is only offered for businesses operating in these Free Zones and does not extend to offshore companies. Offshore companies will receive what is known as a tax exemption certificate instead.
What Exactly Does a Tax Residency Certificate Do?
Now that we know more about tax residency certificates, let’s discuss how they work and their benefits. One of the main advantages of this system is that it allows businesses and legal entities to avoid being taxed in their nation of origin for business conducted within the UAE. This double taxation avoidance agreement is a treaty aimed at relieving double taxation issues, ensuring a fair system for taxpayers while protecting the interests of the national economy.
This program comes, in part, as a partnership between several nations to establish a streamlined taxation system for their citizens. However, the United States still requires all US citizens to declare annual tax returns.
Requirements for Obtaining a Tax Residency Certificate
The tax residency certificate in Dubai is a regulatory requirement for companies, businesses, and individuals operating in Dubai’s many Free Zones. It certifies that a company or entity has an economic presence in the region, even if their company doesn’t have a physical presence in the area. Companies functioning in the UAE for at least a full year are eligible to apply for this certificate.
Companies must meet specific requirements to qualify for a tax residency certificate. Businesses are not permitted to directly request the certificate without being a verified candidate. Below, we’ve put together a list of requirements that companies must meet.
• Tenancy agreement or title deed that’s valid for a minimum of three months
• A valid copy of the company’s trade license
• A valid copy of passport
• A copy of your visa and Emirates ID for the company’s director
• A financial statement providing info for the company’s UAE bank statements for at least six months prior.
Steps for Obtaining a Tax Residency Certificate
To obtain a tax residency certificate, there are several steps you’ll need to take. First, before you start the process, you’ll need to carefully research the documents you’ll need and the fees you’ll need to pay.
1. Create an account on the Ministry of Finance (MoF) web portal.
2. Complete the TRC application form.
3. Attach the required documents in either PDF or JPEG format.
4. Once your documentation has been verified, you’ll receive a confirmation email.
5. Pay the necessary fees via the online portal.
6. After confirmation, your certificate will be mailed via courier.
How Long Does the Tax Residency Certificate Process Take?
The pre-approval process typically takes four-five business days and up to five days for your certificate to be delivered. It’s valid for an entire year and can be renewed annually by following a resubmission process. However, this process can be a bit overwhelming for some investors and business owners. That’s why many have turned to skilled business consultants like MSZ Consultancy to help streamline license applications, visa renewals and stay up-to-date on essential tax regulations.
The Benefits of Obtaining a Tax Residency Certificate
Investors and businesses in the UAE that take advantage of the tax residency certificate can avoid double taxation and receive lucrative tax incentives. This certificate can also allow you to apply for a second separate tax residency certificate to be covered on a corporate and individual level.
• By taking advantage of this certificate and other business incentives, a company can significantly streamline their taxes and finances.
• Businesses can take advantage of tax benefits surrounding imports and exports.
• Can make conducting international business a more beneficial, prosperous process.
The Tax Residency Certificate Cost
When applying for your tax residency certificate, you’ll need to know how much the application fees will cost. This can vary slightly depending on whether the application is for an individual or a corporate structure.
1. For Individual Applicants
A tax residency certificate for an individual will cost roughly AED 100 with an additional AED 2,000, or 540 USD, for the issuance of cards.
2. For Companies
For companies, the application process will cost roughly AED 100 and an additional AED 10,000 for the certificate. This equates to roughly 2,700 USD.
How MSZ Consultancy Can Help with Your Tax Residency Certificate
Whether you’re a single investor or part of a larger corporate structure, you need the help of skilled and experienced business setup consultants. These professionals have the legal know-how to help clients navigate the business in the UAE. From applying for business licenses to handling tax residency certificates in Dubai, the experts at MSZ Consultancy are capable of handling many of the critical inner workings of your business so that you don’t have to waste your time doing it yourself.
So if you’re an investor hoping to make your move to the UAE to conduct business, you’ve come to the right spot. MSZ Consultancy aims to be your one-stop shop for all things UAE-related. Give us a call today at +971 52 544 1248 and let our representatives supercharge your business prospects for the future!