The UAE Federal Tax Authority released a new guide on tax residence and tax residency certificates, titled Tax Procedures Guide on Tax Resident and Tax Residency Certificate – TPGTR1.
Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses and its amendments (“Corporate Tax Law”) was issued on 3 October 2022 and was published in Issue #737 of the Official Gazette of the United Arab Emirates (“UAE”) on 10 October 2022. The Corporate Tax Law provides the legislative basis for imposing a federal tax on corporations and Business profits (“Corporate Tax”) in the UAE.
The provisions of the Corporate Tax Law apply to Tax Periods commencing on or after 1 June 2023.
This guide is designed to provide general guidance on Corporate Tax in the UAE and on tax residency rules. It provides readers with an overview of the following:
- how a Person can determine whether they are a Resident Person for Corporate Tax purposes,
- how a Person can determine whether they are a UAE Tax Resident under domestic law,
- how a Person can determine whether they are a UAE Tax Resident under a Double Taxation Agreement (“DTA”), and
- how a UAE Tax Resident can obtain a Tax Residency Certificate.
Tax relief certificate applications timing
Applications for the Tax Relief Certificate (TRC) can now be submitted during the tax period. Juridical persons (companies) are eligible to apply three months after the start of the tax period. Natural persons can apply as soon as they meet the residency requirements, while government entities can apply one day into the relevant year.
TRCs cannot be requested for future periods, and newly incorporated companies must be established for at least 12 months before they can submit an application.
Documentation requirements
Natural persons claiming benefits under a double taxation agreement must submit proof of UAE residency along with a salary certificate or evidence of their income.
Bank statements are no longer necessary. For those applying under UAE domestic law, additional documents are required, including proof of employment or business, evidence of permanent residence, and documentation showing financial or personal interests in the UAE.
Juridical persons must provide corporate documentation, but the need for audited financial statements have been eliminated.
This guide should be read by anyone that is responsible for tax matters, operating in the UAE, who wants to know more about the application of the domestic Tax Residency rules in the UAE, as well as their tax agents and advisers. It is intended to be read in conjunction with the Corporate Tax Law, the implementing decisions and other relevant guidance published by the FTA.
