Tax Clearance Certificate from the Federal Tax Authority

What is a Tax Clearance Certificate?

The Tax Clearance Certificate is given based on your trade license and it confirms your standing tax affairs are in order with the FTA. A Tax Clearance Certificate in the UAE is an official document issued by the Federal Tax Authority (FTA) confirming that an individual or business has met all their tax obligations and has no outstanding tax liabilities. It is critical for various business activities, including mergers, ownership transfers, and business closures. Additionally, a Tax Clearance Certificate is required before closing a business or deregistering for VAT in the UAE.

This is called the “No Liability Certificate” and has a validity period of one year from the date issued. The Tax Clearance Certificate also has a validity period of one year from the date it is issued. Similarly, a Tax Residency Certificate is valid for one year from the beginning of the financial year selected by the applicant. Tax Residency Certificates are issued for both treaty purposes and domestic purposes.

Any operating registered UAE business can get the FTA Clearance Certificate, available in the following 4 cases: To obtain the certificate, the applicant must have no pending tax liabilities related to VAT, corporate tax, or any other applicable taxes. A VAT Clearance Certificate is often required to ensure compliance with tax laws and avoid penalties or legal issues. The FTA issues Tax Residency Certificates to both natural persons and legal entities in the UAE. However, branches of foreign companies and offshore companies are not eligible to obtain a Tax Residency Certificate.

• Below the Voluntary VAT threshold

• Below the Mandatory VAT threshold

• Not making taxable supplies in UAE.

Required Documents

• Valid Trade License / Business License

• Financial statement from the date of incorporation till the date of application.

• Declaration letter that the Mandatory/voluntary threshold will not be reached in the next 30 days.

• Business Flow chart.

• Declaration letter for no business in UAE & GCC

• Taxable supply declaration from the date of incorporation till the date of request.

• Taxable expense declaration from the date of incorporation till the date of request.

• Authorized Signatory letter

• Reason for requesting the certificate

• Passport, valid residence permit, and Emirates ID for Tax Residency Certificate applications.

• Bank statement covering six months within the financial year related to the Tax Residency Certificate application.

Applications for the Tax Clearance Certificate must be submitted through the FTA's EmaraTax platform. The submission fee for a Tax Clearance Certificate is AED 50, with additional fees potentially applicable based on the applicant's tax status. Similarly, applicants seeking a Tax Residency Certificate must also apply through the EMARATAX portal. The Tax Residency Certificate for treaty purposes incurs a submission fee of AED 50 for the application. If a printed Tax Residency Certificate is requested, an additional AED 250 is charged per copy.

How Can Flyincolour Tax Consultant help?

Flyingcolour Tax and Consultant as an entity provides VAT advisory, optimization, registration, implementation, compliance, and training services in UAE. The processing time for a Tax Clearance Certificate is typically 5 to 7 business days after submission of the application and necessary documents. The certificate issuance process usually takes about five business days from the date the completed application is received. In some situations, applying for a Tax Clearance Certificate may trigger a tax audit from the FTA to ensure compliance. For individuals applying for a Tax Residency Certificate for treaty purposes, it is mandatory to have resided in the UAE for at least 183 days during the requested financial year. Tax Residency Certificates (TRCs) also allow applicants to take advantage of Double Tax Avoidance Agreements (DTAA) signed by the UAE. A certified lease agreement or proof of permanent residence is required to demonstrate ties to the UAE when applying for a Tax Residency Certificate.

Our team of senior qualified tax advisors, finance experts, and tax accountants are happy to provide practical help and advice, which will ensure timely and cost-effective VAT services.

Based on our expertise, we believe that VAT is a complex tax that will undoubtedly undergo multiple modifications in the coming years. Flyingcolour's VAT services are aimed to suit both basic and complex returns for SMEs and larger enterprises.
 

FAQ

What is a VAT clearance?

A VAT clearance certificate in the UAE is an official document issued by the Federal Tax Authority (FTA) confirming that a business or individual has no outstanding VAT liabilities and has met all their VAT obligations. It is often required for business closure, ownership transfers, or to prove compliance with UAE tax laws. To get a VAT clearance certificate, you need to apply through the FTA’s EmaraTax portal, submit the required documents, and pay any applicable fees. The process typically takes 5 to 7 business days.

How to get a VAT certificate in UAE?

To get a VAT certificate in the UAE, you need to apply through the Federal Tax Authority's (FTA) EmaraTax online portal. Ensure you have completed your VAT registration and submitted all required documents, including your trade license and financial statements. After submitting the application and paying any applicable fees, the FTA will process your request, typically within 5 to 7 business days. The VAT certificate confirms that your business is compliant with UAE tax regulations and has no outstanding VAT liabilities.

What is clearance certificate in UAE?

A clearance certificate in the UAE is an official document issued by the Federal Tax Authority (FTA) confirming that a tax-registered entity has met all its tax obligations and has no outstanding tax liabilities. This certificate, including the VAT clearance certificate, is essential for business activities such as ownership transfers, business closure, and securing banking facilities. It is obtained by applying through the FTA’s user-friendly online system, the EmaraTax portal, and submitting the required documents and fees. The clearance certificate helps ensure tax compliance and maintains a transparent business environment in the UAE.

How do I get a VAT exemption certificate?

A clearance certificate in the UAE is an official document issued by the Federal Tax Authority (FTA) confirming that a tax-registered entity has met all its tax obligations and has no outstanding tax liabilities. This certificate, including the VAT clearance certificate, is essential for business activities such as ownership transfers, business closure, and securing banking facilities. It is obtained by applying through the FTA’s user-friendly online system, the EmaraTax portal, and submitting the required documents and fees. The clearance certificate helps ensure tax compliance and maintains a transparent business environment in the UAE.

To learn more about Tax Clearance Certificate from the Federal Tax Authority, 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.