TRC UAE for a Legal Person: Key Steps & Eligibility Criteria
A TRC is a document issued by tax authorities to confirm that a person is a taxpayer and a resident of a specific nation during a particular tax year. The purpose of the concept of tax residence is to establish a connecting factor between a person and a specific jurisdiction for tax purposes.
Individuals and businesses earning income from multiple countries may be taxed both in their home and source countries.
For example, for a UAE company earning income in India, the taxes could be levied as
- India taxes the income because it was generated in India (Source-based taxation)
- The UAE may also tax the company’s global income (residence-based taxation)
Here, the same income is taxed twice—once in the home country and once in the source country.
To avoid this double taxation on the same transaction, countries have entered into agreements to mutually determine the maximum tax that can be collected in certain cases. Such an agreement is known as the Double Taxation Avoidance Agreement (DTAA). Under this agreement, a person has the option to choose between the tax rate specified in the DTAA and the local tax law, whichever is more beneficial. This tax benefit is available to those who provide a Tax Residency Certificate (TRC). Both a natural person (resident individual) or a legal person (corporate entities) can apply for the TRC, provided they meet the eligibility criteria.
What is the importance of TRC?
- TRC helps to claim benefit of tax treaty benefits with other countries.
- It helps to avoid double taxation.
- Strengthens credibility in the eyes of the stakeholders, especially with regards to international taxation.
Understanding TRC UAE is crucial for corporate tax planning. Read our UAE corporate tax guide to stay compliant.
Who can obtain TRC?
The below types of persons can obtain TRC in the UAE:
- Natural person: Refer to our blog for more details.
- Juridical or legal person
- Juridical Government
Who is a legal person?
A legal person or a juridical person shall be considered a Tax Resident in the State in either of the following cases:
- It was incorporated, formed, or recognized in the UAE, excluding a UAE branch registered by a foreign entity.
- It is considered a Tax Resident in accordance with the Tax Law in force.
What are the criteria for a legal person to be eligible for obtaining a TRC?
In order to be eligible to apply for a TRC,
- The legal person must have been established for a period of at least one year.
- Financial accounts must be audited or prepared by an accredited audit firm and attached with other required documents to the application. The report must be certified and stamped by the audit firm. The audited financial report to be attached to the application must cover the year for which the certificate is requested. If the certificate is requested for the present year, the audit report must be covering the past year.
A Tax Residency Certificate is essential for avoiding double taxation. Learn more about TRC UAE and its benefits.
What are the pre-requisites to apply for TRC?
For a legal person, the below documents must be collated and prepared:
- Trade license and directors/shareholders attachment
- Proof of authorization (Establishment contract or power of attorney)
- Copy of Memorandum Of Association
- Passport of all directors, shareholders, and owners.
- Residence permit of all directors, shareholders, and owners
- Emirates ID of all directors, shareholders, and owners
- Audited financial statements certified by an accredited audit firm with seal and signatures
- Six-month bank statement validated by a local bank
- Certified copy of lease agreement
- Tax forms (if any) from the country in which the certificate is to be submitted.
What are the government fees charged for the issuance of TRC?
- Application Submission Fee: AED 50
- Certificate Issuance Fees:
-
- Tax Registrants (individuals and companies): AED 500
- Non-Tax Registrant Individuals: AED 1,000
- Non-Tax Registrant Legal Entities: AED 1,750
- Optional Hard Copy: An additional AED 250 is charged for each requested hard copy of the certificate.
How does BCL Globiz help you obtain TRC?
We, at BCL Globiz, understand that the business must focus on the core activities. We offer one-to-one solutions to businesses on accounting, VAT, corporate tax, TRC, transfer pricing, and payroll, enabling the business to harvest the maximum benefit of the outsourcing of critical functions. Our team of experts will help and guide you to obtain all necessary registrations, certificates, and file returns to stay compliant and to stay ahead of competition. For further information, reach out to our experts at punith@bclglobiz.com
Also read: Securing TRC UAE aligns with corporate tax compliance. Check our corporate tax registration guide for detailed insights.
