How to Obtain Tax Residency Status in the UAE

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Opportunities of Tax Resident Status in the UAE

Tax residents in the UAE are individuals who fall under the jurisdiction of the United Arab Emirates' tax system and are required to pay taxes in accordance with the country's laws.

The United Arab Emirates are known for their favorable tax system for both individuals and companies. This is due to the advantageous geographical location, developing economy, and stable political situation, which attracts more and more investors and entrepreneurs from around the world.

What UAE Tax Residency Offers

Any physical or legal entity can obtain residency. Getting this status helps avoid double taxation if you are a Russian citizen, relieve some contributions, and receive official benefits from the state.

The tax resident status was first classified in September 2022 following the issuance of Cabinet Resolution No. 85. Now, a physical or legal entity can obtain a Tax Residency Certificate (TRC). The document can be obtained and downloaded from the FTA website. A physical carrier is not mandatory.

Advantages of tax resident status:

  • Simplified registration procedure;
  • Favorable conditions for business. Company owners and entrepreneurs can use the status to obtain benefits and state privileges;
  • Company information is kept in a single closed registry. Only the owner and courts can access it;
  • No taxes for individuals;
  • No double taxation;
  • For legal entities: 5% VAT and 9% corporate tax for annual turnover of not less than 375,000 dirhams.

You need tax resident status if you plan to build a business in the UAE, invest in real estate, and receive passive income abroad.

How to Become a Tax Resident of the UAE

The legislation defines the following situations in which a physical person can become a tax resident:

  • Physical presence for 90 days or more in the last calendar year for a citizen/resident of the UAE or a citizen of the GCC, where the individual:
  • resides in the Emirates for an extended period, or
  • is employed or conducting business in the UAE.
  • Physical presence in the UAE for 183 days in the last calendar year;
  • Having a permanent residence and economic interests in the UAE, i.e., work or business.

GCC includes six countries: United Arab Emirates, Qatar, Kuwait, Bahrain, Saudi Arabia, and Oman.

Previously, physical presence for a certain number of days was sufficient to obtain the certificate, but now the presence of ties and economic activity within the Emirates plays a significant role. The decision officially came into force on March 1, 2023.

A legal entity to obtain status must meet one of the following criteria:

  • The company is created and registered according to the rules of current legislation (except: the branch belongs to a foreign person);
  • The company is considered a tax resident according to the current tax legislation.

A tax resident has advantages in trade relations and access to free trade agreements and customs privileges between countries. This is especially profitable for companies engaged in exporting goods abroad.

If you encounter problems with registering a company in the UAE or preparing documents, contact The Level Consulting. We provide a full range of services for opening companies in the Emirates: legal support, transaction preparation, account opening, office rental, etc. We will find a suitable license option for you, develop a step-by-step plan, and help in its implementation. Leave a request on the site for feedback.

How to Issue a Tax Residency Certificate: A Step-by-Step Guide

Before applying, make sure you meet the status of a person who can claim tax residency. Any foreign citizen and local resident have the right to apply to the UAE FTA.

Step 1. Prepare documents

Collect a package of necessary papers in advance. The list will differ for individuals and legal entities.

Documents that individuals should provide:

  • Passport;
  • Valid residency visa;
  • Document confirming permanent residence in the Emirates;
  • Other documents and identity cards - upon request from the FTA.

Companies need to provide a certificate of official registration in the Emirates, articles of association, financial statements, and a bank statement. Additionally, copies of passports of directors, shareholders, or managers may be required. The latest financial report should be verified and confirmed by the bank's seal. With these documents, the organization must prove that it operates legally in the state and conducts honest business, complying with local legislation.

Step 2. Contact the UAE FTA

Reach out to the local tax service or national authority for instructions and explanations. The application can be submitted online on the Federal Tax Authority website.

Step 3. Fill in and submit the application

To submit an application on the FTA site:

  • Log in or register in the personal account;
  • If you have previously undergone registration as a taxpayer, enter "Yes" in the pop-up message on the dashboard. Enter your registration number and email address;
  • If you have not previously gone through the registration process, answer "No";
  • Fill in the application according to the template provided on the site;
  • Upload documents in image format. Pay attention to the picture quality. All lines must be clearly visible.

Save the entered data and confirm the submission of documents. Pay the registration fee for filling out the application. Subsequently, the application status can be tracked in the personal account.

Step 4. Pay the fees

The administrative fee for processing the certificate varies. The application submission cost is fixed – 50 AED. The issuance cost:

  • 500 AED for all individuals registered with tax authorities;
  • 1,000 AED for unregistered individuals;
  • 1,750 AED for unregistered legal entities.

Pay the fee before submitting the application. Keep the receipt or statement to confirm the payment, if necessary.

Step 5. Wait for the decision

After submitting the application and all necessary documents, wait for the tax authorities' decision. The time for decision-making depends on the deadlines set by the FTA. Typically, it's no more than 7 working days excluding weekends and holidays, but each case is individual. The verification period may be extended if you did not provide a complete package of documents or all detailed information.

Receive the certificate if your request is approved. Immediately after receiving the document, you will officially be considered a tax resident of the UAE. Considering all stages and waiting, the entire process should not take more than 3-4 weeks. Remember that the certificate is valid for a limited time, and the application must be resubmitted in the future.

When Can Denial of Residency Occur?

Common reasons for refusal include:

  • Providing an incomplete package of documents;
  • Errors when specifying data;
  • Previously observed violations in the UAE;
  • Unpassed security check;
  • Detection of dangerous diseases during a medical check.

If the problem lies in the documents, check the correctness of the specified data and resubmit the application. This can be done at any time.

Obtaining tax resident status is not a complex and understandable process if you comply with legislative norms and have all the necessary documents. The certificate provides a range of useful advantages for both companies and individuals. You will officially belong to the UAE tax system and can reduce your tax burden.

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