What is a Tax Residency Certificate (TRC)?
A Tax Residency Certificate, also known as a Tax Domicile Certificate, is an official document issued by the UAE’s Federal Tax Authority (FTA). It certifies that an individual or a legal entity is a tax resident of the UAE for a specific period. This certification is instrumental in claiming benefits under the Double Taxation Avoidance Agreements (DTAAs) that the UAE has signed with numerous countries, thereby preventing the same income from being taxed in both the UAE and another jurisdiction.
Benefits of Obtaining a TRC
- Avoidance of Double Taxation: The primary advantage of a TRC is to prevent the same income from being taxed in both the UAE and another country, provided a DTAA exists between the two nations.
- Reduced Withholding Tax Rates: With a TRC, individuals and companies can benefit from reduced tax rates on dividends, interest, and royalties in countries that have DTAAs with the UAE.
- Enhanced Financial Credibility: Possessing a TRC can bolster an entity’s credibility in international business dealings, showcasing compliance with tax regulations.
- Access to International Markets: A TRC can facilitate smoother financial transactions and operations in foreign markets by providing proof of tax residency.
Who Is Eligible for a TRC in the UAE?
For Individuals:
- Residency Duration: Must have resided in the UAE for at least 183 days in the relevant financial year.
- Residency Proof: Should have a permanent place of residence in the UAE and demonstrate the center of financial and personal interests in the country.
For Legal Entities:
- Operational Period: Must have been established and operational in the UAE for at least one year.
- Physical Presence: Should have a physical office space in the UAE; virtual offices are not acceptable.
- Financial Documentation: Must provide audited financial statements for the relevant financial year.
Note: Offshore companies without a physical presence in the UAE are not eligible for a TRC.
Required Documents
For Individuals:
- Passport, visa copy, Emirates ID
- Utility bill or tenancy contract
- Salary certificate or proof of income
- UAE bank statements (6 months)
- Entry/Exit travel report
For Legal Entities:
- Passport and visa copies of stakeholders
- Trade license, MOA
- Financial audit report
- Corporate bank statements
- Tenancy contract
Application Process
- Apply via FTA Portal
Submit your request on the FTA’s official online platform. - FTA Review
The FTA will verify the submitted documents. - Approval Time
Processing generally takes 2 to 4 weeks. - Certificate Validity
Valid for 1 year, based on the relevant fiscal year.
Fees for TRC in UAE
- Individuals: AED 2,000
- Legal Entities: AED 10,000
(Payable via e-Dirham system)
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FAQs
What is a Tax Residency Certificate (TRC) in the UAE?
A Tax Residency Certificate (TRC), also known as a Tax Domicile Certificate, is issued by the UAE’s Federal Tax Authority (FTA) to confirm that an individual or company is a tax resident of the UAE. It is essential for claiming tax benefits under the UAE’s Double Taxation Avoidance Agreements (DTAAs) with other countries. If you’re searching for “how to get a TRC in UAE” or “UAE tax residency certificate meaning,” this certificate helps avoid being taxed twice on the same income.
Who is eligible to apply for a UAE Tax Residency Certificate?
To be eligible for a UAE TRC:
- Individuals must reside in the UAE for at least 183 days in the relevant financial year and have proof of residency, income, and bank activity.
- Legal entities must be operating in the UAE for over a year, have a physical office (not virtual), and submit audited financials.
Offshore companies without a physical presence in the UAE are not eligible. Searching for “TRC eligibility UAE” or “who can apply for a tax certificate in UAE”? This applies to both individuals and onshore businesses.
What are the benefits of obtaining a Tax Residency Certificate in the UAE?
Holding a TRC in the UAE allows individuals and businesses to:
- Avoid double taxation on income.
- Access reduced withholding tax rates on dividends, interest, and royalties.
- Improve credibility in global financial dealings.
- Facilitate smoother cross-border transactions.
If you’re looking up “why do I need a UAE TRC” or “tax benefits of TRC UAE,” this certificate is key to optimizing your international tax planning.