UAE Tax Residency

UAE Tax Residency | Discover How To Avoid Double Taxation

UAE tax residency: Learn all about how to avoid double taxation, tax exempt status and required documents when you open a business in Dubai

If you own a business in Dubai but are also a resident of the U.S. or Canada, you could face paying taxes to both countries. However, if you make your business into a tax resident of the United Arab Emirates, this dilemma can be avoided.

Please invest 2 minutes of your time to watch the UAE tax residency video below. It spells out how you can benefit. Or if you prefer to read, then feel free to skip the video and go straight to the text below:

UAE tax residency: What is the Double Taxation Avoidance Treaty?

The United Arab Emirates has signed Double Taxation Avoidance Treaties (DTAT) with a number of countries so that individuals and businesses:

  • UAE Tax Residency | Discover How To Avoid Double TaxationAren’t paying income tax to two governments for income earned in one country
  • Aren’t paying income tax on investments to more than one government
  • Can reduce or eliminate taxes paid on dividends and tax-exempt deposits
  • Can be exempt from capital gains taxes

Also:

  • National airlines and shipping companies can be exempt from freight taxes
  • Government investment in the UAE can take advantage of tax breaks

DTATs benefit the United Arab Emirates because foreign investment and capital is attracted to the country and bilateral economic relations are enhanced. As of March, 2012, the UAE has signed DTAAs with 63 countries.

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UAE tax residency: Which companies can become tax residents?

A Tax residency Certificate (TRC), gives a company access to tax treaty benefits under a double taxation avoidance agreement.

UAE Tax Residency | Discover How To Avoid Double TaxationTo apply for a TRC a company must have been in existence for at least three years. The Ministry of Finance (the Ministry) can issue tax residency certificates retrospectively. So if, for example, a company was incorporated in 2013, the Ministry can issue TRCs for 2013, 2014 and 2015 in the year 2016.

As a rule, the Ministry will only issue tax residency certificates to companies that have signed a Memorandum of Understanding with the Ministry and are registered in either mainland UAE or in one of the Free Trade Zones.

If these requirements are not met, the Ministry may consider issuing a tax residency to a company on a case-by-case basis.

It should be noted that, companies seeking to obtain tax treaty relief for their UAE
companies, must consider whether the tax authorities in the other relevant country will require a UAE tax residency certificate in order to grant treaty benefits.

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UAE tax residency: Requirements of the Ministry of Finance

Companies wishing to obtain a tax residency certificate from the Ministry must show them the following:

  • Audited accounts and a lease agreement
  • Trade license
  • Lease contractUAE Tax Residency | Discover How To Avoid Double Taxation
  • Copy of passport and residence of the company director
  • Request Letter from the company
  • Bank statements for the last six months
  • Audited financial accounts

UAE tax residency: Process and cost

To apply for a tax residency certificate, go to the Customer Services Center at the Ministry of Finance, submit all of the necessary documents and pay the prescribed fees, which are AED. 5000 + 3 paid via an e-dirham card.

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UAE Tax Residency was last modified: November 29th, 2015 by Ramapati Singhania

Ramapati Singhania

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