Tax resident status in the UAE

In recent years, tax residence issues have become very important when dealing with tax declarations for the government, banks and tax offices. Obtaining tax resident status in the UAE has grown in popularity for several reasons:

• The UAE is set to join the Common Reporting Standard (CRS) later than most other countries — starting from 2018.
• There are generally no taxes for corporate and private residents in the UAE on trading income, dividends, investments, bonds, etc.
• The UAE offers vast opportunities for international businesses; companies are easy to incorporate and can be managed effectively.

Confiduss' professional team can help you acquire tax residence in the UAE, with all the associated legal benefits. Saving you time and money is our number-one priority, so call us now to get a free consultation or apply for UAE tax residence.

Who can apply for tax resident status in the UAE?

A UAE tax residence certificate can be issued to an onshore company or a private individual, but you will need to become a UAE resident first. This can be achieved in one of the following ways:

• You can register a company in your name. There are no requirements for this company to participate in active trading; basically, its main purpose is to support your tax residence status. This status is maintained on the basis of the onshore company, which must be renewed yearly.
• You can buy real estate in the UAE worth over one million dirhams. The owner(s) must be a single private individual or a married couple. If there is more than one owner (or if the marriage of the couple is not officially registered), than each person must invest one million dirhams in the property. Our package offer includes applications for a residence visa with the option of annual renewal.

UAE onshore companies

Company incorporation in the UAE is fairly straightforward, and proven to be a great vehicle for international trading as well as for holding dividends and interest. A company set up for tax residence purposes cannot just be a shell, and you must maintain some turnover on the corporate bank account.

Note that only onshore free-zone companies in the UAE can be considered for tax residence purposes. Therefore, Ras Al Khaimah companies will not be of use in this respect.

If you decide to set up your onshore company in a free zone, consider the Umm al-Quwain free zone: unlike many others, it has no requirements for share capital or for statutory accounting and audit. As in all onshore UAE free zones, your company will require a special licence, depending on the type of activity you plan to carry out. An onshore company must also have a rented office — this service is included in our company package.

Obtaining a tax residence certificate: the process

UAE tax residence certificate acquisition can be separated into the following major steps:

1. set up an onshore company
2. obtain a residence visa
3. open a private bank account
4. receive the tax residence certificate

As soon as you have been granted tax resident status in the UAE, you can apply for the tax residence certificate. The certificate is issued either within six or nine months from the date on which you received your residence visa. You will be asked to present your private bank statement for the last six or nine months. Your bank account must be active, with a positive balance, and transactions must pass through the account regularly. The immigration authorities will also check whether you have entered the UAE at least three or four times during the last six months using your residence visa.

Note that the tax residence certificate is only valid if you have a UAE residence visa. It is issued for a period of one year and renewed annually. However, you do not have to order new certificate each year if you do not need one.

Tax residence packages

We offer corporate packages combining:

• An onshore UAE company (incorporation and maintenance)
• A residence visa
• A tax residence certificate with tax ID number

Annual maintenance includes the annual administration of the company and issuance of the tax residence certificate for the calendar year.

The tax ID number will be issued only with the tax residence certificate.

The certificate can be issued in the client's name, but can also be addressed to a recipient in a specific country. This is more relevant, however, when the certificate is required for a company, rather than a private person, and is usually done for tax purposes, i.e. when the company needs to invoke a double tax treaty signed between the UAE and another country.

Although obtaining a tax residence certificate might seem like quite a straightforward process, you must always take into account the specific features of the United Arab Emirates and its changing legislation, and you would be advised to be reasonably flexible in terms of the timescale. Nevertheless, in the majority of cases tax residence certificates are successfully received within two weeks of filing the application, as long as you have fulfilled the obligations regarding your private bank account and made several entries to the country using the residence visa.

If you still have any questions regarding UAE tax residence, take a look at our F.A.Q. section section or contact our lawyers now..