Tax Residency

Understanding Tax Residency in Dubai: A Comprehensive Guide

Dubai, a global business hub, offers numerous advantages for individuals and companies seeking to establish a presence in the UAE. One of the key benefits is the opportunity to obtain a Tax Residency Certificate (TRC), which can provide access to various tax treaties and exemptions. This guide delves into the criteria, benefits, and application process for obtaining a TRC in Dubai.

What is a Tax Residency Certificate?

A Tax Residency Certificate is an official document issued by the UAE’s Federal Tax Authority (FTA) that certifies an individual’s or entity’s tax residency status in the UAE. This certificate is essential for individuals and businesses looking to benefit from the UAE’s extensive network of Double Taxation Agreements (DTAs) with over 130 countries.

Criteria for Obtaining a Tax Residency Certificate

For Individuals

To qualify for a TRC as an individual, you must meet one of the following conditions:

1. Physical Presence: You have been physically present in the UAE for 183 days or more during a consecutive 12-month period.

2. 90-Day Rule: You have been physically present in the UAE for 90 days or more during a consecutive 12-month period and are:

   • A UAE national,

   • A GCC national,

   • A holder of a valid UAE residence permit, and

   • Either have a permanent place of residence in the UAE or carry out employment or business activities in the UAE.

3. Center of Vital Interests: Your principal place of residence and the center of your financial and personal interests are in the UAE.

These criteria are outlined in Cabinet Resolution No. 85 of 2022 and Ministerial Decision No. 27 of 2023, effective from 1 March 2023.

For Companies

To qualify for a TRC as a company, the entity must:

• Be incorporated or otherwise established under the applicable legislation in the UAE.

• Be effectively managed and controlled from the UAE.

Additionally, the company must have been established in the UAE for at least one year and be registered for VAT. For businesses planning a Mainland Business Setup or a Free Zone Company Formation, obtaining a TRC is crucial for maximizing international tax benefits.

Benefits of Obtaining a Tax Residency Certificate

1. Access to Double Taxation Agreements: A TRC enables individuals and companies to benefit from the UAE’s DTAs, reducing or eliminating double taxation on income earned abroad.

2. Tax Exemptions: Depending on the terms of the applicable DTA, TRC holders may enjoy exemptions in other jurisdictions.

3. Proof of Tax Residency: It serves as official proof of tax residency in the UAE for legal and financial purposes.

4. Enhanced Credibility: Possessing a TRC demonstrates compliance with international tax standards and strengthens credibility with investors and financial institutions.

Application Process for a Tax Residency Certificate

For Individuals

1. Ensure Eligibility: Confirm that you meet the residency criteria outlined above.

2. Gather Required Documents: Passport copy, UAE residence visa, Emirates ID, certified lease agreement, salary certificate, bank statements, and entry/exit report.

3. Submit Application: Apply through the FTA online portal.

4. Processing Time: Typically 5–7 working days.

For Companies

1. Ensure Eligibility: Confirm the company meets residency criteria.

2. Gather Required Documents: Trade license, MOA, shareholder details, audited financial statements, bank statements, and lease agreement.

3. Submit Application: Apply via the FTA portal.

4. Processing Time: Usually 5–7 working days.

For assistance with applications, see our Required Documentation Guide.

Conclusion

Obtaining a Tax Residency Certificate in Dubai provides significant benefits for individuals and businesses, including access to international tax treaties, potential tax exemptions, and enhanced credibility. With proper guidance, you can navigate the application process efficiently and maximize the benefits of UAE tax residency for your personal or business finances.