Issuance of a Domestic Certificate in the UAE for Tax Purposes Abroad

Introduction 

As globalization intertwines economies, individuals and businesses often find themselves navigating complex international tax systems. One such essential tool for UAE residents and companies is the Tax Residency Certificate (TRC), also known as the Domestic Certificate. Issued by the UAE's Federal Tax Authority (FTA), this certificate serves to confirm tax residency in the UAE, a prerequisite for benefiting from Double Taxation Agreements (DTAs) and ensuring compliance with foreign tax obligations.

Whether you are seeking relief under a DTA or simply need proof of residency for tax purposes, understanding the requirements, processes, and practical steps to secure this certificate is crucial.

Legal Framework 

The UAE has signed over 140 DTAs to enhance international trade and investment while avoiding double taxation for residents and companies. These agreements aim to prevent individuals or entities from being taxed twice on the same income by two jurisdictions. The TRC is issued under the UAE’s tax regulations and in alignment with these treaties.

The Federal Tax Authority is the primary body responsible for issuing TRCs. It facilitates the online application process for individuals and entities, making it more efficient and accessible.

Purpose of a Tax Residency Certificate

The TRC plays a vital role in: 

1. Tax Reduction or Exemption: By confirming UAE residency, individuals and businesses can access tax relief benefits under applicable DTAs. 

2. Tax Compliance: The certificate ensures smooth interactions with foreign tax authorities, reducing the risk of disputes. 

3. Proof of Residency: It establishes residency for legal or financial matters abroad, even in the absence of a DTA.

Practical Side: Steps to Obtain a TRC

Here’s a step-by-step guide to help you obtain your certificate: 

1. Create an FTA Account

            Register on the FTA’s official website and create an e-services account. 

2. Prepare Documentation 

Gather the required documents based on your category (individual or company). Ensure they are accurate and up-to-date to avoid delays. Our team will help you with the documents.

            Translate and attest non-English or non-Arabic documents if required. 

3. Complete the Application

            Log in to your account and select the relevant certificate type.

            Fill out the form and upload the necessary documents. 

4. Pay the Fees

            Individuals: AED 1,000 

            Companies: AED 1,750 

            Additional fees may apply for expedited processing or document attestation. 

5. Application Review

The FTA will verify your application. Be prepared to respond promptly to any additional document requests or clarifications otherwise the application will be closed automatically by the FTA team. 

6. Certificate Issuance

If approved, FTA will issue a draft of your TRC, and the final certificate will be issued within 15 business days and can be downloaded from the portal. 

Eligibility and Requirements

Eligibility varies depending on whether the applicant is an individual or a company: 

Individuals

  - Must have resided in the UAE for at least 183 days during the tax year or 90 days (depending on the personal case). 

  - Required Documents: 

            Valid Emirates ID, residence visa, and passport copies. 

            Six months of UAE bank statements. 

    - Proof of residence (e.g., tenancy contract or utility bills). 

Companies 

  - Must be operational in the UAE for at least one financial year (offshore companies are ineligible). 

  - Required Documents: 

            Valid trade license. 

            Audited financial accounts. 

            Company incorporation or establishment contracts. 

FAQs 

1. What is the difference between a Tax Residency Certificate and a Commercial Activities Certificate?

   The TRC is issued for individuals and companies to confirm UAE tax residency, particularly to claim benefits under DTAs. 

   The Commercial Activities Certificate is for entities not eligible under DTAs but requiring proof of UAE operations for non-tax purposes. 

2. Can offshore companies apply for a TRC?

   No, offshore companies are excluded. Only UAE-based companies with physical operations are eligible. 

3. How long is the TRC valid?

   The certificate is valid for one year from the date of issuance. 

4. What happens if my application is rejected?

   Applications may be rejected due to incomplete documentation or failure to meet eligibility criteria. In such cases, you can reapply after addressing the issues identified by the FTA. 

5. Can non-residents apply for a TRC?

   Non-residents cannot apply. Applicants must prove significant physical presence or operations in the UAE. 

6. Is attestation required for documents?

   Certain documents may need to be notarized and attested, especially if they are in a language other than English or Arabic. This applies particularly to companies, as applications for certificates are issued to individuals, and all documents are in the official language of the country. 

Practical Tips for a Smooth Application Process

Plan Ahead: Begin the process early to account for potential delays. 

Ensure Accuracy: Double-check all details on your application to avoid rejections. 

Consult Experts: Legal professionals can help with documentation and liaising with the FTA. 

Understand DTA Benefits: Familiarize yourself with the treaty provisions applicable to your home country to maximize benefits. 

As experienced legal professionals, we can: 

1. Assess your eligibility and advise on specific requirements. 

2. Prepare and verify all documentation to ensure accuracy and compliance. 

3. Manage your application and respond to FTA inquiries promptly. 

4. Provide strategic advice on leveraging DTAs for maximum tax relief. 

Conclusion

Obtaining a Tax Residency Certificate in the UAE is a critical step for individuals and businesses navigating international taxation. With benefits ranging from tax relief to proof of residency, the TRC simplifies compliance and enhances financial planning. Our team is here to guide you through this process, ensuring your application is seamless and successful. 

For further assistance or to initiate your TRC application, contact us at info@brandactivation-setup.com.