Tax Resident and Tax Residency Certificate under UAE Laws

Background

On 9 September 2022, the UAE Cabinet of Ministers issued Decision No. 85 of 2022, which aims to define the requirements and conditions for determining a person as a Tax Resident in UAE. The effective date of the new rules is 1 March 2023.

On 22 February 2023, the UAE MoF issued Ministerial Decision No.27 of 2023 on implementation of certain provisions of Cabinet Decision No. 85 of 2022 on Determination of Tax Residency. This new decision provides additional details regarding the requirements for a natural person to qualify as tax resident in the UAE.  The effective date of the new rules is 1 March 2023.

In October 2024, the FTA released a tax procedures guide on Tax Resident and Tax Residency Certificate Rules detailing the procedural aspects.

Tax Residency under UAE domestic law

A legal person is considered a Tax Resident in UAE in any of the following two cases:

1. If it was established, formed, or recognised in accordance with UAE Laws. It does not include the branch that is registered by a foreign legal person in UAE.

2. If it is considered a Tax Resident under the UAE Laws.

A natural person is considered a Tax Resident in UAE if any of the following conditions are met:

1. If his usual or main place of residence and the centre of his financial and personal interests are in UAE.

2. If he has been physically present in UAE for a period of one hundred and eighty-three days (183) or more, during the relevant twelve (12) consecutive month period.

3. If he has been physically present in UAE for a period of ninety (90) days or more, during the relevant twelve (12) consecutive months, and holds the nationality of UAE, a valid residence permit in UAE or the nationality of any of the member states of the Gulf Cooperation Council, and meets any of the following:

a. Having a permanent place of residence in UAE.

b. Practising a job or business in UAE.

The principal place of residence must be in the UAE. It is the place where the individual habitually resides or normally resides. This is the jurisdiction where he spends most of his time when compared to any other jurisdiction as part of his settled routine in a way that is more than transient.

Center of financial and personal interests must be in the UAE. UAE shall be the state where the personal and economic interests are the closest or of the greatest significance to the individual. Occupation, familial and social relations, cultural or other activities, place of business, place from which the property of the individual is administered, and any other relevant facts and circumstances should be considered.

All days or parts of a day on which an individual is physically present in the UAE will be counted towards total number of days he is present in the UAE. The days do not need to be consecutive in determining the 183-day or 90-day period.

However, any day that was spent in the UAE due to exceptional circumstances may be disregarded by the authorities. An exceptional circumstance is an event or situation beyond the individual’s control occurring while he is already in the UAE, which he could not have predicted, and which prevents him from leaving the UAE as originally planned.                                

Tax Residency under Double Taxation Agreements

Each DTA has its own rules and criteria for determining when juridical and natural persons are considered to be tax resident in the countries which are party to the DTA. This may differ from the criteria for determining who is a UAE Tax Resident under domestic law, or a Resident Person under the Corporate Tax Law. Therefore, each scenario should be considered on a case-by-case basis and in light of the wording of the specific DTA.

A DTA that is in force in the UAE, takes precedence over the provisions of any domestic law, including the Corporate Tax Law and Cabinet Decision No. 85 of 2022. Therefore, meeting the definition of a Resident Person under the Corporate Tax Law does not automatically mean that a Resident Person will be considered a tax resident in the UAE for the purposes of a DTA.

 A key feature of DTAs are the rules that determine in which country the juridical person is tax resident. Under an applicable DTA, tax residence may be assigned to the UAE or to another jurisdiction depending on the facts and circumstances and the residence criteria of the relevant agreement (“treaty resident”).

Tax Residency Certificate

 A Tax Residency Certificate is a certificate issued by the FTA proving that the Person is a Tax Resident in the UAE.

 Tax Residency Certificate can be obtained for DTA purposes and for purposes other than the application of a DTA.

Timelines to submit application for obtaining TRC

The TRC can now be applied for a current tax period or a prior tax period. Previously, this was possible only after the completion of the tax period.

For juridical persons, the Tax Period is the Financial Year. Generally, this is the 12- month period for which the Taxable Person prepares Financial Statements. For natural persons, the Tax Period is the Gregorian calendar year. 

The timing for submission of the applications are now as follows:

For Juridical persons - after 3 months from the start of the relevant tax period

For Natural persons - as soon as the criteria to be tax resident is met

For government/government controlled entities, after one day in to the relevant tax period.

The TRC cannot be obtained for a future period (the tax period which has not yet commenced) as there is no certainty of a person qualifying as a resident for a future period.

Newly incorporated companies which are yet to file tax return must be established for 12 months before being eligible to apply for a TRC.

A Tax Residency Certificate cannot be obtained for a period longer than 12 months.

How to apply for a Tax Residency Certificate

A juridical person or natural person can apply for a Tax Residency Certificate via the FTA's online EmaraTax portal, using their EmaraTax account. The steps are provided below:

• Step 1: Go to the EmaraTax portal.
• Step 2: Create an account. You can use a current account on EmaraTax, create a new one, or link the old account related to the previous Tax Certificate portal.
• Step 3: Once logged in, choose “other services”.
• Step 4: Select “Tax Residency Certificate”.
• Step 5: Select the Tax Registration Number (“TRN”) for Corporate Tax for the applicant applying for a Tax Residency Certificate. If there is no Corporate Tax TRN, choose the last option "No TRN". However, if you are obtaining a Tax Residency Certificate for the purposes of a DTA, the other contracting state may require this. Providing a TRN will reduce the application fees and also entitle the applicant to autofill the details in the application.
• Step 6: Select the type of Tax Residency Certificate requested. This will either be for the purposes of a DTA or otherwise. For those applying to benefit from a DTA, the other applicable country will need to be selected first.
• Step 7: Complete the remaining fields and upload supporting documentation. This will include the ability to request printed certificates and request the FTA to attest an international form
• Step 8: Pay the submission fees
• Step 9: Submit the application.
• Step 10: After obtaining FTA’s approval, pay the processing fees Failure to pay the processing fees within 30 business days may result in your application being cancelled. Instead, the applicant would be required to resubmit a new application and repay the submission fee.
• Step 11: Download the certificate.

Once the applicant has paid the processing amount, a download icon will be displayed for the particular request from the Tax Residency Certificate platform, in which the applicant can click and download the digital Tax Residency Certificate.

The Tax Residency Certificate will also be sent to their registered email ID.

If applicant also requested a printed certificate, it will be delivered by courier (Emirates post).

Documentation required to apply for a Tax Residency Certificate for purposes other than the application of a Double Taxation Agreement

Natural person

Has been physically present in the UAE for 183 days or more in a consecutive 12-month period:

a. Emirates ID and resident visa, or

b. copy of passport, and entry and exit report from the Federal Authority of Identity and Citizenship or a local competent Government entity.

Has been physically present in the UAE between 90-182 days in a consecutive 12-month period:

a. one of the following:

- Emirates ID and resident visa, or

- copy of passport, and entry and exit report from the Federal Authority of Identity and Citizenship or a local competent Government entity,

AND

b. one of the following:

- proof of employment or Business like proof of source of income, salary certificate, or evidence of carrying on a business in the UAE, or

- proof of permanent place of residence: for example, certified tenancy contract, other long-term rental contract, or written or signed statement from the landlord or owner of the property, or title deed with a utility bill (i.e. water/electricity or gas) in the name of the natural person.

Has a primary place of residence and centre of financial and personal interests in the UAE:

a. one of the following:

- Emirates ID and resident visa, or

- copy of passport, and entry and exit report from the Federal Authority of Identity and Citizenship or a local competent Government entity.

b. proof of financial and personal interests in the UAE: a written statement explaining how the applicant believes their financial and personal interests are in the UAE, alongside all supporting documentation, and

c. proof of primary place of residence: for example, certified tenancy contract, other long-term rental contracts for each property residing in, or written and signed statement from the landlord or owner of the property, or title deed with a utility bill (i.e. water/electricity or gas) in the name of the natural person, and

d. proof of source of income, if applicable: for example, salary certificate, share certificate, Trade License, savings, or other proofs of income (e.g. local bank statements).

Juridical person

a. Licence (for example, trade licence) and lease agreement,

b. UAE Corporate Tax TRN, if applicable,

c. certificate of incorporation,

d. certified copy of the Memorandum of Association,

e. authorised signatory (name, Emirates ID and passport) and proof of their authorisation (Establishment Contract or the Power of Attorney).

f. proof of being effectively managed and controlled in the UAE (if applicable)

Documentation required to apply for a Tax Residency Certificate for Double Taxation Agreement purposes

Natural person

a. one of the following:

- Emirates ID and resident visa, or

- copy of passport, and entry and exit report from the Federal Authority of Identity and Citizenship or a local competent Government entity

b. proof of residence, if applicable,

c. source of income/salary certificate,

If the DTA residence requirements refers to being resident in the UAE, you should provide the relevant documents from the previous table (that is, documents required for a Tax Residence Certificate for purposes other than a DTA).

Juridical person

a. Licence (for example, trade licence) and lease agreement,

b. UAE Corporate Tax TRN, if applicable,

c. certificate of incorporation,

d. certified copy of the Memorandum of Association,

e. authorised signatory (name, Emirates ID and passport) and proof of their authorisation (Establishment Contract or the Power of Attorney),

f. proof of being effectively managed and controlled in the UAE (if applicable)

Application response by the FTA

Upon submission of the application, the FTA will review the application and, if approved, issue the Tax Residency Certificate for applicants to download. Users can request hard copies of their certificates for an additional fee.