In a globalised economy, earning income from multiple countries is increasingly common. Such scenarios can complicate the taxation of income earned. To ease tax compliance and avoid double taxation on NRI income in both India and UAE, the NRI tax regulations in UAE facilitate the provision of a Tax Residency Certificate (TRC).

If you are a non-resident Indian (NRI) living in the UAE, you may be earning income in both the UAE and India. In this scenario, applying for a Tax Residency Certificate (TRC) would provide several benefits under NRI tax regulations in India and UAE.

What is a TRC or a Tax Residency Certificate in Dubai?

A Tax Residency Certificate (TRC) in Dubai, UAE, is also known as a Tax Domicile Certificate (TDC). TRC/TDC is an officially valid document issued by the UAE Ministry of Finance that serves as proof that an individual or a company is a resident of the UAE for tax purposes. Individuals residing in UAE for at least a minimum of 183 days in the financial year are eligible to apply for a Tax Residency Certificate. Companies registered and operating in the UAE for at least a year are eligible to apply for a Tax Residency Certificate.

Here are some of the reasons to apply for a TRC:

  • To establish tax residency in the UAE to the Indian income tax authorities,
  • To avoid double taxation on income earned in the UAE by availing benefits under NRI Double Taxation Avoidance Agreements (DTAAs) between the UAE and India,
  • To claim other benefits under tax treaties between India and UAE. This includes reduced tax rates, tax reliefs, and exemptions available for certain types of income.
  • For better tax planning and management of wealth in the UAE and India, and
  • To ensure compliance with tax laws and regulations pertaining to NRIs in UAE and India.

Who needs a Tax Residency Certificate in Dubai?

A Tax Residency Certificate in Dubai can be applied by the following:

1. Under the head of “Natural Persons”

Applicants must have resided in the UAE for at least 183 days. A yearly lease agreement, officially documented by competent legal authorized bodies (such as EJARI in Dubai or any registered municipalities and free zone authorities in other Emirates), must be attached to the application.

To be eligible for a Tax Residency Certificate (TRC), a legal entity must have been established for at least one year. Financial accounts must be audited or prepared by an accredited audit firm, with the certified and stamped audit report attached to the application. The audited financial report must cover the year for which the certificate is requested. If the certificate is requested for the current year, the audit report should cover the previous year.

Note: Offshore organizations and registered companies cannot apply for the TRC service as they do not qualify for exemption under the Double Taxation Avoidance Agreements.

Step-by-Step Guide to Apply for a Tax Residency Certificate in Dubai

Individuals and companies can apply for a Tax Residency Certificate in Dubai via an online process. The application process involves a few simple steps.

Step 1: Register on the portal

​Visit the FTA (Federal Tax Authority) website and create a tax certificate account by clicking on ‘Create new account’. Fill in all the information on the login page to create an account. The details include name, email address, user name, country code, PO box, address, and password followed by security code.

Step 2: Complete application

  • Log in with the user ID and password and click on ‘Create Tax Residency Certificate’ from the dashboard. If you are already a ‘Registered Taxpayer’ in eServices, click on ‘Yes’. Else, click on ‘No’ to proceed.
  • If you click on ‘Yes’, you need to provide the TRN number and the registered email ID in eServices for the verification of the eServices account. Upon verification, you are navigated to the page for application of a Tax Residency Certificate. Details are auto-filled as per the selected TRN.
  • If you click on ‘No’, you are required to fill out the online Tax Residency Certificate application form.
  • It is important to select the type of certificate (for a natural person/legal person) and the start date of the financial year before filling in the application form.
  • Verify all the details filled in the application and read the terms and conditions before the submission of the application. You can click on ‘Submit’ if you have the documents handy for upload or click on ‘Save as draft’ for later use.

Step 3: Upload the documents

Attach and upload all the required documents as per the list. Go through the list of documents mentioned on the FTA (Federal Tax Authority) website and keep them scanned beforehand for quick completion of the application process.

For Individuals

  • Copy of passport
  • Copy of UAE residence visa
  • Copy of Emirates ID
  • A certified copy of a valid lease agreement or property ownership proof
  • Proof of source of income (trade license, employment contract, salary certificate, etc.)
  • Validated six months' bank statement from the local UAE bank
  • A statement from the General Directorate of Residency and Foreigners Affairs (GDRFA) or Federal Authority for Identity and Citizenship (ICA) confirming days stayed in the UAE.
  • Tax form (if any) from the country in which the certificate is to be submitted.

For Companies

  • Copy of the trade license and directors or shareholders’ attachment
  • Copy of MOA (Memorandum of Association)/established contract certified by official authorities if it is not a sole company
  • Copy of company’s (legal person’s) owners/directors/partners’ passport
  • Copy of company’s (legal person’s) owners/directors/partners’ emirates IDs
  • Copy of company’s (legal person’s) owners/directors/partners’ permits of residence
  • Certified copy of audited financial statements of the company
  • Validated bank statements for the last six months from a local UAE bank
  • A certified copy of the company’s lease agreement
  • Tax form (if any) from the country in which the certificate is to be submitted.

Step 4: Make a payment

The Tax Residency Certificate request application can be submitted for approval after paying the application submission fee displayed on the page. As you click on 'Pay', you are directed to a payment gateway (eDhiram) for submission of the fee payment. Here are the fees applicable for a Tax Residency Certificate:

  • AED 50 for Tax Residency application submission fee
  • AED 500 issuing fee for all tax registrants and commercial activity (individuals and companies) i.e. entities already registered with the FTA
  • AED 1,000 for non-tax registrant individuals (natural persons)
  • AED 1,750 for non-tax registrant companies (legal persons)
  • AED 250 for each requested printed hard copy certificate (additional fee)

Step 5: Application submission

Submit the application for a Tax Residency Certificate and wait for the approval from the FTA.

Step 6: Application review

Upon verification of application, FTA gives approval for issuance of Tax Residency Certificate. If there is any additional information or documents required, the FTA will contact you before giving approval.

Step 7: Issuance of Tax Residency Certificate

A tax residency certificate will be issued within five business days of the submission of an application and fee payment.

It is important to note that the Tax Residency Certificate in UAE comes with one year validity from the starting date of the financial year.

Conclusion

To conclude, a Tax Residency Certificate helps NRIs prove their tax residency in the UAE to the Indian tax authorities and comply with requisite NRI tax regulations in UAE and in India. NRIs can thus avoid double taxation on income earned in the UAE and avail all the benefits under double taxation avoidance treaties between UAE and India. They can manage their tax liabilities, assets and wealth more effectively with the help of the TRC.