Chapter Fifty Five: Tax Residency Certificates. Latest Updates
1. What is a TRC?
A TRC is a certificate issued by the Federal Tax Authorities.
It confirms the status as a UAE resident in the context of a given Double Taxation Avoidance Agreement between the UAE and a given country.
It is issued for a period of one year and addressed to one country, it is essential when seeking the benefits of a DTT.
The UAE’s network of agreements extends worldwide. We can review your own case and plug you to the adequate tax advisors. Note DTT cover all types of taxes (Income and corporate taxes; Withholding tax on dividends, royalties, and interests; Air transport and the shipping revenues; Incomes from immovable properties or property alienation; and Revenues derived from personal services) and come on top of the prevailing benefits living, working and investing in the UAE, ie : no taxes on corporate income and personal incomes, succession, property and personal gains.
2. New applicable rules from 1st of March 2023.
You may be familiar with the existing criteria for eligibility, but please note there have been recent announcements that may concern you. Below is a recap of what you need to know before you makeup your mind and contact us for help.
The UAE Cabinet issued Resolution No. 85 of 2022 (Decision)., redefining the criteria of tax residency for legal and natural Persons in the UAE.
The Resolution outlines the requirements and conditions for identifying a Person as a Tax Resident in the State, and the associated administrative matters, such as formalities for the issuance of Tax Residency Certificates (TRCs) which will be enforced on the 1 March 2023.
Corporate Entities
A corporate entity (Legal Person) should be considered as a UAE tax resident if one of these following conditions are met:
- The entity is formed, recognized, or established in the UAE and not a UAE branch that was registered by a foreign entity.
OR
- The Entity is considered as a UAE tax resident as per the applicable law.
Based on the public consultation document that was released by the Ministry of Finance (MoF) on 28 April 2022, a company that is established outside the UAE might still be treated as a UAE tax resident if it is effectively managed and controlled in the UAE. However, the UAE corporate tax legislation has not yet been enacted to determine the requirements under the second point above.
Natural Persons
Natural persons are considered tax residents in the UAE under Article 4 of the Resolution if one of the following criteria is satisfied:
- The person has resided physically in the UAE for at least 183 days throughout the course of a single 12-month period.
OR
- The individual has been physically present in the UAE for 90 days or more in a row and is a UAE citizen, UAE resident, or GCC national who either (i) has a permanent place of residence in the UAE or (ii) works or operates a business in the UAE.
OR
- The person has their primary place of residence and their financial and personal interests in the UAE (no min presence requirements).
The new requirements make UAE closer to international norms for tax residence and tax compliance.
It is predicted that the current process and the documentation specifications for acquiring a TRC will undergo significant changes.
At Turnkey Family Office, we can assist you with:
- Determining eligibility for accessing TRC.
- Filing TRC Application.
- Liaising with the FTA and acquiring the TRC.
