Key Facts

• The Tax Residency Certificate (TRC) in the UAE is a document that helps prevent double taxation.
• It allows businesses and individuals to take advantage of double taxation treaties signed by the UAE.
• To obtain a TRC, individuals must have been a resident of the UAE for at least 180 days, while legal persons must have been established for at least one year.
• The TRC can be obtained with the help of financial institutions like BMS Auditing.
• It provides tax benefits, avoids double taxation, and confirms an individual or organization’s standing in the UAE legal system.
• The TRC is valid for one year and can be renewed.

Introduction

The UAE’s thriving economic activity is currently improving international trade links, but they can also become complicated when they are exposed to the tax system. Businesses operating in the UAE are often faced with the issue of double taxation, where income is taxed in both the UAE and another country.

The TRC is a certificate that allows qualifying government entities, businesses, and individuals to take advantage of double taxation treaties signed by the UAE. It helps individuals and businesses reduce the burden of taxation and benefit from adherence to a double taxation treaty. By obtaining a TRC, individuals and businesses can avoid paying taxes on the same income in both the UAE and another country, thus preventing the issue of double taxation.

Understanding TRC in UAE

The Tax Residency Certificate (TRC) is a document provided by the UAE government to individuals and legal persons who qualify as tax residents of the UAE. A tax residency certificate is a proof that an individual or legal person is a resident of the UAE for tax purposes. It confirms their status as tax residents and helps them access the benefits of double taxation treaties signed by the UAE. For natural persons, the applicant must have been a resident of the UAE for at least 180 days to be eligible for a TRC.

Benefits of Obtaining a TRC for Individuals and Businesses

Obtaining a Tax Residency Certificate (TRC) in the UAE offers several benefits for both individuals and businesses. Some of the key benefits include:

• Avoidance of double taxation: By obtaining a TRC, individuals and businesses can avoid paying taxes on the same income in both the UAE and another country, thus preventing the issue of double taxation.
• Access to tax exemptions: The TRC allows individuals and businesses to access the benefits of double taxation treaties signed by the UAE. These treaties often provide tax exemptions or reduced tax rates for certain types of income or transactions.
• Compliance with tax laws: Having a TRC ensures that individuals and businesses are compliant with the tax laws of the UAE. It confirms their tax residency status and helps establish their credibility and transparency in the UAE’s legal system.
• Minimization of tax liability: The TRC enables individuals and businesses to minimize their overall tax liability by taking advantage of tax exemptions or reduced tax rates specified in the double taxation treaties. This can result in significant tax savings.

Eligibility Criteria for TRC in UAE

To be eligible for a Tax Residency Certificate (TRC) in the UAE, certain criteria must be met. The eligibility criteria vary for natural persons and legal persons. For natural persons, the applicant must have a valid residence permit in the UAE. They must have been a resident of the UAE for at least 180 days to qualify for a TRC. For legal persons, such as companies, the eligibility criteria include being established for a period of at least one year. The company must have a valid trade license and should have been in operation for at least a year.

Criteria for Individuals

To qualify for a Tax Residency Certificate (TRC) in the UAE as an individual, certain criteria must be met. These criteria include:

1. Salary certificate: Individuals must provide a salary certificate as proof of their employment and income in the UAE.
2. Emirates ID: A valid Emirates ID is required to establish the individual’s identity and residency status in the UAE.
3. Tenancy contract: Individuals must provide a copy of their tenancy contract or lease agreement as proof of their residence in the UAE.

The following documents are required for individual TRC applications:

1. A copy of the directors’ and shareholders’ attachment and trade license.
2. Official authorities certifying the establishment contract (if it’s not a sole company).
3. A duplicate passport of the legal entity’s owners, partners, or directors
4. A duplicate Emirates ID of the legal person’s owners, partners, or directors
5. A copy of the residency permits for the owners, partners, and directors of the legal entity
6. A certified copy of the financial accounts that have undergone auditing (the financial accounts need to be prepared, audited, and stamped by an approved audit company and need to cover the year for which the certificate is needed). The audit report must cover the previous year if the certificate is being obtained for the current year.
7. Six months’ worth of verified bank statements from a nearby UAE bank.
8. A certified copy of the leasing contract.
9. Tax returns, if applicable, from the nation where the certificate is to be presented. The user is asked to send the original tax form to FTA if the form needs an FTA signature and stamp.

The Documents necessary for each Natural person TRC application:

1. Copy of Passport
2. Copy of UAE Resident Visa
3. Copy of Emirates ID
4. A certified copy of a tenancy contract, or residential lease agreement—an annual leasing agreement that has been duly recorded by the relevant authorities, such as the free zone authorities, municipalities in other Emirates, and EJARI in Dubai.
5. The source of revenue (such as a trade license, salary certificate, etc.)
6. Six months’ worth of verified bank statements from a nearby UAE bank.
7. A report from the Federal Authority for Identity and Citizenship (ICA) or General Directorate of Residency and Foreigners Affairs detailing the duration of the resident’s stay in the UAE (the applicant must have been in the UAE for a minimum of 180 days).
8. Tax returns from the nation where the certificate is to be presented, if any. The user is requested to deliver the original tax form to FTA via courier with return service if the form needs an FTA signature and stamp. For FTA to attest the form, the applicant must complete and sign the fields pertaining to his personal information.

Criteria for Companies

To qualify for a Tax Residency Certificate (TRC) in the UAE as a company, certain criteria must be met. These criteria include:

1. Trade license: The company must have a valid trade license issued by the relevant authorities in the UAE.
2. Financial report: The company must provide a recent certified audited financial report or a bank statement for the previous six months. The financial report must be prepared or audited by an accredited audit firm and stamped by the bank.
3. Memorandum of Association: The company must provide a copy of its Memorandum of Association, which outlines the company’s structure and operations.

Required Documents for TRC Application

To apply for a Tax Residency Certificate (TRC) in the UAE, certain documents must be submitted. The specific requirements may vary based on the parties involved, but some common documents required for TRC application include:

• Bank statement: A recent bank statement for the previous six months is typically required to provide proof of financial transactions and stability.
• Audit report: Companies are often required to provide a certified audited financial report prepared by an accredited audit firm.
• Salary certificate: Individuals applying for a TRC must provide a salary certificate as proof of their employment and income in the UAE.
• Tenancy contract: Individuals may be required to submit a copy of their tenancy contract or lease agreement as proof of their residence in the UAE.

It is important to consult with the relevant authorities or a trusted financial institution like BMS Auditing for accurate and up-to-date information regarding the required documents for TRC application.

The Application Process for TRC in UAE

The application process for obtaining a Tax Residency Certificate (TRC) in the UAE is relatively straightforward. It can be done online through the official government entities’ websites. The online process is designed to make it convenient and efficient for applicants to submit their applications.

To apply for a TRC, individuals and businesses need to create an account on the designated government entity’s website. Once the account is created, applicants can fill out the application form and upload the required documents. It is important to ensure that all the required documents are accurate and complete to avoid any delays or rejections in the application process.

The government entity will review the application and the submitted documents. If everything is in order, the TRC will be issued within a specified period of time, usually within 5-7 working days. Applicants will be notified via email or through their online account once the TRC is issued.

Step-by-Step Guide to Apply Online

Applying for a Tax Residency Certificate (TRC) in the UAE can be done conveniently through the online process. Here is a step-by-step guide to applying online:

1. Visit the official website of the designated government entity responsible for TRC applications.
2. Create an account by providing the required information such as name, contact details, and email address.
3. Once the account is created, log in to the online portal using the credentials provided.
4. Navigate to the “Services” tab or a similar section on the website.
5. Look for the option to apply for a TRC or tax residency certificate.
6. A pop-up window will appear when the user clicks the “Create Tax Residency Certificate” button on the dashboard. The user will be prompted to select “Yes” or “No” when asked if they are currently registered as a taxpayer.
7. The user can select “No” to move on with the request if they are not a registered taxpayer in eServices.
8. After selecting “Yes,” the user must verify their eServices account by entering their TRN Number and email address.
9. The user must input the member’s TRN/TIN and email address if they are registered as a Tax Group and one of the members want to apply for a tax certificate.
10. The user will be directed to the certificate application request page if the submitted details match those of eServices.
11. If the information entered does not match eServices, the user will be redirected to the certificate application request page and will not be regarded as registered.
12. Upload the required documents, such as salary certificate, bank statement, and tenancy contract.
13. Pay the application fee, if applicable, using the available online payment methods.
14. Submit the application and wait for the government entity to review and process it

Common Mistakes to Avoid in the Application Process

When applying for a Tax Residency Certificate (TRC) in the UAE, it is important to avoid common mistakes that can delay the application process or lead to rejection. Here are some common mistakes to avoid:

1. Providing an incorrect email address: Make sure to provide a valid and correct email address during the application process. This will ensure that you receive important notifications and updates regarding your application.
2. Not regularly checking the registered email: Once you have provided your email address, it is important to regularly check your inbox, including spam or junk folders, for any communication from the government entity processing your TRC application.
3. Failing to submit all the required documents: Carefully review the list of required documents and ensure that you have included all the necessary information and supporting documents. Missing or incomplete documents can result in delays or rejection of the application.

Validity and Renewal of TRC

Once a Tax Residency Certificate (TRC) is issued in the UAE, it is valid for one year from the date of issue. To continue availing the benefits of the TRC, individuals and businesses need to renew their certificates before the expiry date. The renewal process involves submitting the required documents and paying the renewal fee. It is important to note that the renewal process must be initiated before the expiry date to avoid any disruptions in the tax residency status.

Fees and Charges for TRC Application

When applying for a Tax Residency Certificate (TRC) in the UAE, there are certain fees and charges that applicants need to be aware of. These fees and charges may vary depending on the government entity handling the TRC applications.

• Application fees: Applicants are required to pay an application fee when submitting their TRC application. The application fee covers the processing and administration costs associated with the application.
• Additional costs: In addition to the application fee, there may be additional costs involved in the TRC application process. These additional costs may include fees for document attestation, translation services, or any other services required to complete the application.

Additional Costs and Charges to Consider

In addition to the application fees, there may be additional costs and charges associated with the Tax Residency Certificate (TRC) application in the UAE. These additional costs may vary depending on individual circumstances and the specific requirements of the application. Here are some examples of additional costs and charges to consider:

• Local bank fees: If the TRC application requires bank statements or financial reports, the applicant may incur charges from the local bank for providing these documents.
• Property management fees: If the TRC application requires proof of residence, such as a tenancy contract, there may be property management fees involved in obtaining or renewing the contract.
• Customer satisfaction fees: Some financial institutions or service providers may charge fees for assisting with the TRC application process, ensuring customer satisfaction, or providing additional support.

Conclusion

Understanding the TRC requirements in the UAE is crucial for individuals and businesses. Acquiring a Tax Residency Certificate offers numerous advantages but requires knowledge of eligibility criteria, necessary documents, and the application process. Ensure you meet the criteria, submit all required documents accurately, and follow the renewal guidelines to maintain compliance. Familiarize yourself with potential pitfalls to avoid delays or rejections. The TRC not only establishes your tax residency but also streamlines financial transactions and legal obligations. Keep informed about fees, validity periods, and troubleshooting steps to navigate the process smoothly. Stay informed, plan ahead, and fulfill your TRC obligations efficiently.

About Arnifi

Arnifi is digital first Corporate service provider helping companies enter the Middle East region, starting with UAE and Saudi Arabia markets. Founded and backed by professionals from Amazon, Souq and other large companies operating in KSA – the team understands what it takes to succeed as a startup in both UAE and Saudi Arabian markets, apart from going through the setup process multiple times. Arnifi will provide a truly digital experience to entry and scale up of companies both UAE and Saudi Arabia. Discover tailored solutions and strategic partnerships that propel your business forward. Check out at – www.Arnifi.com for more details.

Frequently Asked Questions (FAQ)

Can I apply for a TRC if I am a freelancer in UAE?

Yes, freelancers in the UAE can apply for a Tax Residency Certificate (TRC). They will need to provide supporting documents such as a salary certificate, tenancy agreement, bank statement, Emirates ID, and UAE visa to establish their tax residency in the UAE.

How does the TRC benefit expatriates living in UAE?

The Tax Residency Certificate (TRC) benefits expatriates living in the UAE by establishing their tax residency, which helps avoid double taxation. It enables them to access the benefits of double taxation treaties and obtain tax exemption certificates. The TRC also confirms their status as UAE residents.

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