The UAE’s commercial activities are currently strengthening global trade ties. However, for international companies setting up their businesses in the UAE, the challenge of double taxation is real. This is when a tax residency certificate in the UAE comes to the fore. It’s a document issued by the UAE’s Federal Tax Authority (FTA) and serves a dual purpose, combat double taxation and tax evasion.
To benefit from the 139 Double Taxation Agreements (DTA) that the UAE has with most of its trade partners, individuals as well as legal entities need to present their Tax Residency Certificates. This way, the burden of taxation on international businesses and individuals operating from the UAE can be considerably eased. Any business operating on the mainland or in a free zone and having been active in the country for at least one year is eligible to apply for a Tax Residency Certificate.
Validity of UAE Tax Residency Certificate
The validity of the tax residency certificate in the UAE is one year from the date of issuance. Both businesses and individuals can use the Tax Residency Certificate. Depending on specific requirements, further certificate applications may also be submitted. Offshore companies should obtain a tax exemption certificate since they cannot obtain tax residency certificates. Pre-approval for the certificate can take four to five working days, and after authorization is granted, it takes five to seven working days for the UAE to provide a tax residence certificate.
Prerequisites for obtaining a tax residency certificate
- A business’s certificate of incorporation;
- The company’s organizational chart;
- Copies of the directors’, shareholders’, or managers’ passports and valid visas for residency in the UAE;
- The business must be legally operating in the UAE and possess a valid trade license (Mainland, DED, or Free Zone);
- A copy of the business’s Memorandum of Agreement (Memorandum of Association);
- The most current certified audited financial statements or bank statements, stamped by the bank, for a UAE company for the last six months.
Benefits of Tax Residency Certificate in the UAE
The UAE provides excellent opportunities to start profitable businesses. The country’s attractive tax climate is only one of the many factors that entice new corporations from all over the world to choose the UAE as their headquarters. With a 90 percent expatriate population, a tax residence certificate in the UAE is necessary. Let’s examine why it’s so crucial to get one:
- It validates an individual’s or organization’s standing in the UAE legal system;
- It helps you avoid paying additional taxes as you undergo the import-export process;
- It furthers the development of bilateral economic relations;
- Being a resident of the UAE allows you to benefit from tax reductions and avoid paying double taxes in your home country;
- Both individuals and businesses are permitted to hold multiple certifications.
Why choose Unity Partners for your UAE tax residency certificate?
Unity Partners can help you acquire a Tax Residency Certificate in the UAE. Seeking professional tax advice and guidance for your company will shorten the time it will take to acquire the Certificate and enable you to save on double taxation. For more information, reach out to one of our business set-up advisors today.