FTA Issues Updated Guide on Tax Residency and Certificate Application Procedures

In October 2024, the UAE’s Federal Tax Authority (FTA) published an updated guide on tax residency procedures, providing general guidance and examples of tax residency as per UAE domestic law and Double Taxation Agreements. The guide also explains how to apply for a Tax Residency Certificate (TRC) in the UAE for both individuals and entities.

The guide outlines key criteria for obtaining a TRC, with notable updates including:

Updated TRC Application Timelines

TRCs can now be applied for during the relevant tax period, which was previously only allowed after the period concluded. The application timing varies as follows:
– For Entities (Juridical Persons): After three months from the start of the relevant tax period.
– For Individuals (Natural Persons): As soon as the criteria for tax residency are met, either under domestic law or through a Double Tax Agreement.
– For Government Entities or Government-Controlled Entities: One day into the relevant year.

 TRCs cannot be issued for a future period since residency status cannot be confirmed in advance. Newly incorporated companies that haven’t yet filed a tax return must be established for 12 months before applying for a TRC.

Documentation Requirements for TRC Applications

For individuals applying for a TRC under a Double Taxation Agreement, physical presence in the UAE for more than 183 days within a 12-month period is required. Supporting documents include:
– Proof of Residency: This may include an Emirates ID and residence visa, or a copy of a passport with an entry/exit record.
– Income Documentation: Such as a salary certificate or other proof of income.
– Bank statements are no longer needed.

For TRC applications under UAE domestic law, additional documentation is required:
– Physical Presence in UAE (90-182 Days): Proof of employment or business activity, or evidence of a permanent residence in the UAE.
– Primary Residence and Financial/Personal Interests in UAE: Proof of the primary residence, financial interests, and source of income in the UAE.

TRC Application Requirements for Juridical Persons (Entities):

Corporate documentation required for entities includes a trade license, certificate of incorporation, Memorandum of Association, UAE corporate tax registration number, and proof of authorized signatories. Notably, audited financial statements are no longer required, as TRC applications can now be submitted during the tax period.