Tax Residency Certificate (TRC) (also referred to as a UAE tax residency certificate), which is also known as the Domicile Certificate, is issued to individuals and companies; however, only eligible applicants can obtain a UAE tax residency certificate to exempt the applicants from double taxation. TRC which is issued for a period of one year is beneficial for both the individuals and companies as courtesy they don’t have to pay tax in their home country by taking the benefit double taxation avoidance agreement. The TRC is valid for one year from the beginning of the selected financial year. Additionally, possessing a TRC enhances an individual’s or business’s credibility with foreign tax authorities. Holdings of TRCs can enjoy reduced withholding taxes in accordance with DTAA provisions. The TRC is often required for treaty purposes, enabling the tax payer to claim benefits under double taxation agreements.
Understanding the Benefits of a Tax Residency Certificate
A Tax Residency Certificate (TRC) issued by the Federal Tax Authority (FTA) is an essential document for individuals and businesses seeking to optimize their tax position in the UAE. By confirming your tax residency status, a TRC allows you to benefit from the UAE’s extensive network of Double Taxation Agreements (DTAAs) with other countries. This means you can avoid being taxed twice on the same income, significantly reducing your overall tax burden. For businesses, holding a tax residency certificate opens doors to international markets, enhances your reputation with foreign tax authorities, and can lead to substantial savings through reduced withholding taxes. To ensure you are fully leveraging these benefits, it is important for businesses to understand how to link TRN with Customs Registration as part of their tax optimization strategy. Individuals also benefit from streamlined tax compliance and improved financial planning. Ultimately, a TRC is a powerful tool for managing your tax obligations efficiently and supporting your global business ambitions.
Tax Residency (Domicile) Certificate
What is Double taxation avoidance agreement (DTT)?
This is an agreement treaty between two countries to ease tax during the process of import and export and also for other taxes like the income tax, inheritance tax, VAT and many more. Double taxation is the doctrine by which a person or an organization pays tax to two countries on the same income. Let’s say if a person is doing business in UAE he will pay Tax in UAE and the other to the resident country. The UAE has the authority to issue a tax residency certificate for permanent residents and companies and frees them from paying taxes in both countries as it has signed the taxation treaty with 117 countries. The UAE has signed 146 Double Taxation Avoidance Agreements (DTAAs) with different countries. A Tax Residency Certificate can be issued for treaty purposes or for domestic purposes, depending on the applicant's needs. DTAAs are significant because they promote cross-border trade and investment. Additionally, DTAAs result in higher economic cooperation between countries, making international business more feasible. Saudi Arabia was the first GCC country with which UAE had signed a double taxation avoidance agreement was back in the year 2018. The first Double Taxation Agreement was signed between the UAE and France. A recent Double Taxation Agreement was signed between the UAE and Qatar.
Change of issuing Authority
Till recently these certificates were issued by the Ministry of Finance but in November 2020, the authority responsible for issuing these was changed and now these are being issued by Federal Tax Authority. The Tax Residency Certificate (TRC) is issued by the Federal Tax Authority (FTA). Tax Residency Certificates must be applied for through the Federal Tax Authority’s online platform. Applicants who previously used the previous TRC portal can link their accounts to the new EmaraTax portal for continuity. The individuals who have been residing in UAE for a minimum of 180 days or those who have a UAE residence visa can apply for the TRC. Natural persons applying for a TRC must have spent at least 183 days in the UAE during the requested financial year. According to Cabinet Decision No. 85 of 2022, an individual may also qualify as a tax resident if their principal place of residence and the center of their financial and personal interests are in the UAE. The Federal Tax Authority (FTA) requires proof of financial interests when evaluating an individual’s residency status. Applicants may request attestation or FTA stating of their TRC or related forms as part of the process. Only a completed application with all required documents and payment will be processed by the FTA.
Documents required for an individual
Following documents need to be submitted by an individual if he/she requires a Tax Residency Certificate. To apply for a TRC, individuals must submit their application online via the EmaraTax portal. The standard submission fee for a TRC application is AED 50. Applicants can receive their TRC as a digital certificate after payment is processed, unless a printed copy is requested.
-
Passport copy
-
Copy of the UAE residency visa
-
Emirates ID Copy
-
Certified copy of the residential lease agreement, tenancy contract, title deed, or long term rent contract as proof of permanent and permanent place of residence (documents may be required from or attested by a government entity or government entities)
-
Utility bills as additional proof of permanent residence
-
Latest salary certificate or proof of permanent income
-
Past 6 months bank statement from a local bank
-
Entry and exit report and exit report issued by the federal authority or a local competent government entity to confirm and specify the number of days the applicant has resided in UAE
-
Tax forms (if any) from the country to where the certificate must be submitted
Documents required for a company:
-
Certified copy of the company trade license (issued by a government entity)
-
Establishment contract certified by official authorities (not required if it's a sole proprietorship company)
-
A copy of the company’s owners/partners/directors’ passports, IDs and permits of residence
-
Passport copy of the shareholders and the manager
-
Copy of the Shareholders and manager’s residence visa
-
Emirates ID Copy of both the shareholders and manager
-
Certified copy of the audit report/financial statements
-
Past 6 months bank statement of the company from a local bank
-
Certified copy of the company lease agreement or tenancy contract (documents may be required from or attested by a government entity or government entities)
-
Specify the tax period for which the TRC is requested
-
Tax forms (if any) from the country to where the certificate must be submitted
Tax Residency for Businesses
For businesses operating in the UAE, establishing tax residency is crucial for accessing the benefits of the country’s tax treaties and ensuring compliance with local regulations. The Federal Tax Authority (FTA) determines a company’s tax residency based on its place of effective management and control. A juridical person—such as a company incorporated in the UAE, including those in Free Zones—is considered a UAE tax resident if it is managed and controlled from within the country. Foreign companies can also qualify as UAE tax residents if their effective management and control are based in the UAE. To obtain a tax residency certificate, businesses must submit a comprehensive application to the FTA, including key documents like a valid trade license, an audited financial report, and proof of authorization. Once the FTA verifies that the business meets all tax residency requirements, a TRC is issued, enabling the company to benefit from the UAE’s favorable tax environment and double taxation agreements.
How to Apply for a Tax Residency Certificate in UAE: A Step-by-Step Procedure
Getting a TRC certificate in the UAE is not that typical. With these steps in mind, you can easily apply and obtain the TRC.
-
Ensure you meet the eligibility criteria and residency requirements.
-
Collect all the required documents and convert them into either PDF or JPEG format.
-
Apply online through the Federal Tax Authority portal.
-
If you’re already a registered taxpayer (tax registrant), then enter your TRN and email address. Please note that different fees may be applicable for tax registrants and non-tax registrants.
-
If you’re a new taxpayer, then enter “NO” and fill in the required details.
-
Fill out the TRC registration application. If applying as a company, you must provide details of your business activity as applicable.
-
Upload your documents.
Note: Through the same portal, applicants can also request other services, such as a commercial activity certificate, in addition to the TRC.
-
Pay the application fees
-
Once completed, the approval takes 4-5 days.
-
After approval, the TRC comes within 5-7 working days.
If you have any query related to how to avoid double taxation then feel free. The processing time for a TRC application is typically 5 business days. The Federal Tax Authority generally takes 10 business days to respond to a completed tax residency certificate application. All parts of the day spent in the UAE are counted when determining tax residency days.
Common Mistakes to Avoid When Applying for a TRC
Applying for a Tax Residency Certificate can be straightforward, but certain mistakes can cause unnecessary delays or even result in rejection. One of the most frequent errors is submitting incomplete or incorrect documentation, such as missing a trade license, audited financial report, or not providing a valid Emirates ID. Another common issue is failing to meet the physical presence requirement or not being able to prove effective management and control in the UAE. It’s also important to use the correct application platform, such as the EmaraTax portal, and to ensure all required fees are paid. Before submitting your application, double-check that all documents are up to date and accurately reflect your financial and business status. Taking these precautions will help ensure a smooth and successful TRC application process.
TRC Renewal: Staying Compliant Year After Year
Maintaining your status as a UAE tax resident requires renewing your Tax Residency Certificate annually. The renewal process is similar to the initial application and involves submitting a new set of required documents, such as an updated trade license and the latest audited financial report, to the Federal Tax Authority (FTA). It’s essential to ensure that all information is current and that you continue to meet the tax residency criteria set by the FTA. Timely renewal of your TRC helps you remain compliant with UAE tax laws and allows you to continue benefiting from double taxation agreements. To avoid any disruptions, start preparing your renewal application well before your current certificate expires, and consider consulting with tax professionals or the FTA for guidance on any changes in requirements or procedures. Staying proactive with your TRC renewal ensures uninterrupted access to the advantages of being a recognized UAE tax resident.
FAQ
How much is the TRC fee in UAE?
The fee for applying for a Tax Residency Certificate (TRC) in the UAE varies depending on the applicant type. The standard submission fee is AED 50. For natural persons who are tax registrants, the fee is AED 500, while non-tax registrant individuals pay AED 1,000. Legal persons and companies may have different fee structures based on their registration status. Additional fees apply if you request a printed certificate. Payments are made online through the Federal Tax Authority's EmaraTax portal during the application process. Always check the latest fee schedule on the official FTA website before applying to ensure accuracy.
What does TRC mean money?
TRC stands for Tax Residency Certificate. It is an official document issued by the Federal Tax Authority (FTA) in the UAE that certifies an individual or company as a tax resident of the UAE. This certificate helps avoid double taxation by proving residency under the UAE’s Double Taxation Avoidance Agreements (DTAAs) with other countries. Holding a TRC can reduce withholding taxes and enhance credibility with foreign tax authorities. The certificate is valid for one year from the selected financial year and is essential for benefiting from tax treaties and optimizing tax obligations in cross-border trade and investment.
What is the time period for TRC?
The Tax Residency Certificate (TRC) in the UAE is typically valid for one year, starting from the beginning of the selected financial year. Applicants must select the relevant tax period for which the TRC is requested, which cannot be a future period. For legal persons, the tax period usually corresponds to the financial year for which financial statements are prepared. Newly incorporated companies must have completed at least one year of operation before applying. The Federal Tax Authority processes TRC applications within approximately 5 to 10 business days after receiving a completed application with all required documents and fees.
How do I get a TRC?
To get a Tax Residency Certificate (TRC) in the UAE, you must apply online through the Federal Tax Authority’s EmaraTax portal. Ensure you meet eligibility criteria, such as being physically present in the UAE for at least 183 days in the financial year or having your principal place of residence and financial interests in the UAE. Prepare required documents, including passport, Emirates ID, residency visa, lease agreement or title deed, salary certificate, bank statements, and entry and exit reports. Submit the application with a AED 50 fee, pay any additional fees if applicable, and wait for processing, which typically takes around 5 business days.
To learn more about Avoid Double Taxation - Get A Tax Residency Certificate (TRC), book a free consultation with one of the Flyingcolour team advisors.
Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.