What is a UAE Tax Residence Certificate? A UAE Tax Residence Certificate (“TRC”) is an Official document issued by the Federal Tax Authority (“FTA”) certifying that an Individual or Legal Person is a Tax Resident in the UAE. TRC is often used to benefit from reduced Withholding Tax Rates under Double Taxation Agreements. What are the Criteria for Tax Residency in the UAE? The Criteria for UAE Tax Residency is outlined in Article 53 of Federal Decree-Law No. 28 of 2022 and Cabinet Decision No. 85 of 2022. Further clarifications for Natural Persons are provided in Ministerial Decision No. 27 of 2023. Meeting these criteria allows an Individual or Corporate Entity to be considered a Tax Resident in the UAE which can be confirmed through a TRC issued by the FTA. However, being a Tax Resident does not automatically make a Person Liable for Corporate Tax, they must also qualify as a Taxable Person under the UAE Corporate Tax Law. What conditions must a Legal Person meet to be considered a Tax Resident in the UAE? A Legal Person is considered a Tax Resident of the UAE if it meets one of the following Criteria: Incorporation: It is Incorporated or otherwise Formed or Recognised in the UAE, such as Limited Liability Company, Free Zone Company, Private Shareholding Company, Public and Private Joint Stock Company, Trusts etc. Recognition under Tax Laws: It is considered a Tax Resident under other UAE Tax Laws, such as the UAE Corporate Tax Law. What conditions must an Individual meet to be considered a Tax Resident in the UAE? An Individual is considered a Tax Resident of the UAE if it meets one of the following Criteria: 183 Days Rule: Physically present in the UAE for 183 days or more within a 12-month period. 90 Days Rule: Physically present for 90 days or more within a 12-month period, and i. A UAE or GCC National, or Hold a valid UAE Resident Permit and ii. Have a Permanent Place of Residence in the UAE or Engage in Employment or Business in the UAE. Primary Residence: Their Usual or Primary Place of Residence and Center of Financial and Personal Interests are in the UAE. How do Double Tax Agreements (DTAs) affect Tax Residency? DTA Rules: Each DTA has Specific Rules for determining Tax Residency for both Legal Persons and Individuals. Different Criteria: DTA Criteria may differ from UAE domestic Tax Residency Requirements. Precedence of DTAs: DTAs take Precedence over Domestic Laws, including the Corporate Tax Law and Cabinet Decision No. 85 of 2022. Resident Person Definition: Being classified as a Resident Person under the Corporate Tax Law does not guarantee Tax Residency under a DTA. Tax Residency Assignment: Under a DTA, Tax Residency may be assigned to the UAE or Another Jurisdiction based on the Agreement’s Terms and the Specific Circumstances. How to apply for a UAE TRC? A legal person or an individual can apply for a TRC through the FTA’s online EmaraTax portal using their EmaraTax account. What Time Periods are covered by the UAE TRC? Eligible Periods: A TRC can be issued only for the Current Tax Period or a Prior Tax Period. Tax Period Definition: i. Legal Persons: The Financial Year (12-month period for preparing Financial Statements). ii. Individuals: The Gregorian Calendar Year (Jan-Dec). Future Periods: A TRC cannot be issued for Future Periods (periods that have not started). Duration Limit: The Certificate cannot cover a period longer than 12 months. When can Applicants apply for a UAE TRC for the Current Period? Legal Persons: Application will be considered by the FTA after 3 months into the Current Period. Individuals: Application will be considered by the FTA as soon as the Criteria for Tax Residency are met. Government Entities and Government-Controlled Entities: Application will be considered by the FTA after 1 day into the Current Period. Newly Incorporated Companies: Must be established for at least 12 months before applying for a TRC. Exempt Persons: Can apply for a TRC as they are eligible to apply for the TRC. Read More What is a UAE Tax Residence Certificate? A UAE Tax Residence Certificate (“TRC”) is an Official document issued by the Federal Tax Authority (“FTA”) certifying that an Individual or Legal Person is a Tax Resident in the UAE. TRC is often used to benefit from reduced Withholding Tax Rates under Double Taxation Agreements. What are the Criteria for Tax Residency in the UAE? The Criteria for UAE Tax Residency is outlined in Article 53 of Federal Decree-Law No. 28 of 2022 and Cabinet Decision No. 85 of 2022. Further clarifications for Natural Persons are provided in Ministerial Decision No. 27 of 2023. Meeting these criteria allows an Individual or Corporate Entity to be considered a Tax Resident in the UAE which can be confirmed through a TRC issued by the FTA. However, being a Tax Resident does not automatically make a Person Liable for Corporate Tax, they must also qualify as a Taxable Person under the UAE Corporate Tax Law. What conditions must a Legal Person meet to be considered a Tax Resident in the UAE? A Legal Person is considered a Tax Resident of the UAE if it meets one of the following Criteria: Incorporation: It is Incorporated or otherwise Formed or Recognised in the UAE, such as Limited Liability Company, Free Zone Company, Private Shareholding Company, Public and Private Joint Stock Company, Trusts etc. Recognition under Tax Laws: It is considered a Tax Resident under other UAE Tax Laws, such as the UAE Corporate Tax Law. What conditions must an Individual meet to be considered a Tax Resident in the UAE? An Individual is considered a Tax Resident of the UAE if it meets one of the following Criteria: 183 Days Rule: Physically present in the UAE for 183 days
