Individuals and businesses earning income from multiple countries may be taxed both in their home and source countries.
For example, Mr. Alex, a UK passport holder, moves to Dubai, UAE, for work, and gets a UAE residence visa. To avoid UK taxes, he applies for a Tax Residency Certificate (TRC) after staying 183+ days in the UAE. With the TRC, he proves UAE tax residency and benefits from the UAE-UK tax treaty.
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 tax treaties or 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) and a legal person (corporate entity) 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
- Helps to avoid double taxation
- Strengthens credibility in eyes of the stakeholders, especially with regards to international taxation
Who is a natural person, and what are the criteria for a natural person to be eligible for obtaining TRC?
A natural person in the UAE refers to an individual. In the context of obtaining TRC, a natural person is someone who satisfies the below:
- The person must have been a resident of the UAE for more than 183 days in a calendar year.
- Can prove his residency through ownership of a residence or an annual lease agreement officially documented by the competent authorities, such as Ejari in Dubai or municipalities in other Emirates.
- Holds a UAE residency visa
What are the pre-requisites to apply for TRC?
For a natural person, the below documents must be kept ready before filing a TRC application.
- Passport copy
- UAE residence visa copy
- Emirates ID copy
- Proof of residence ownership, tenant contract copy, or a certified copy of the residential lease agreement documented by Ejari, municipalities, or free zones.
- Source of income certificate (for example, salary certificate)
- 6 months bank statement validated by a local bank
- Entry and exit report from the Federal Authority of Identity and Citizenship or a local competent Government entity.
- 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 to obtain TRC?
We, at BCL, understand that businesses must focus on their core activities. We offer one-stop solutions for accounting, VAT, corporate tax, TRC, transfer pricing, and payroll, enabling businesses to maximize the benefits of outsourcing critical functions. Our team of experts helps and guides you in obtaining all necessary registrations and certificates and filing returns to ensure compliance and stay ahead of the competition.
Businesses exploring reliable accounting partners can also review top-rated agencies on platforms like DesignRush.
If you’re navigating UAE taxation and wondering how TRC impacts your obligations, check out our UAE Corporate Tax Guide for key insights.
For further information, reach out to our experts at punith@bclglobiz.com
