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Tax Residency Certificate- Its Benefits

Globalization has led to businesses no longer being limited to one geographical territory. Therefore, it is incredibly important to ensure that such businesses are not paying taxes twice. To accomplish this, you will need to obtain a Tax Registration Certificate (TRC) from the appropriate authority.

TRCs are official documents issued by countries’ government authorities upon application made by residents (individuals or corporations) to confirm their status as tax residents of those countries. In the UAE, Federal Tax Authority (FTA) is empowered to issue TRC. TRC allows a company to take advantage of the Double Tax Avoidance Agreement (DTAA) signed by the UAE with various countries.

The DTAA is a tax treaty signed by two or more nations to assist taxpayers in avoiding double taxation on the same income. It becomes applicable in cases where an individual is a resident of one nation but earns income in another.

In the UAE, TRCs are available to both free zone businesses and mainland businesses that have been operating for more than a year. Offshore companies, on the other hand, are not eligible because their operations are conducted outside of the UAE. A person who has lived and worked in the UAE for at least 183 days is also eligible for a TRC.

TRC Benefits

  1. TRC is accepted as a reliable document across the globe to substantiate the residency of an entity by Tax Authorities;
  2. Avoidance of double taxation;
  3. Entities can consider tax planning and restructure their transactions considering the provisions of DTAA;
  4. Tax advantages for trade purposes- import and export;
  5. Claiming back taxes if you paid them in the same year when you became a UAE tax resident.

To obtain TRC one must have a valid company license, copies of the passport, residential visa and Emirates id for the shareholders/partners/authorized representatives, certified audited financial statements during the required year, Tax Residence Number (TRN) certificate and the corresponding registered email address, certified bank statement for at least 6 months during the required year, certified commercial tenancy contract/title deed and memorandum of Association/Articles of Association of the company.

In the framework of global strategic partnerships and to enhance competitiveness, UAE has an extensive network of more than 120 double tax treaties in force or pending, which benefit expatriates and companies. The UAE also has a double tax treaty in place with the Kingdom of Saudi Arabia, which is the first of its kind in the Gulf Cooperation Council (GCC), as none of the GCC countries have mutual DTTs.

How Alya Auditors can help?

Alya Auditors Services help companies from all jurisdictions in the UAE to obtain Tax Residence Certificate. We provide services relating to assessment, preparation, filing of applications with the Federal Tax Authority, and verification of documents. With a team of experienced professionals, we ensure that the process of obtaining TRC is hassle-free.

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