Dubai is one of the world’s fastest-growing financial hubs – and one of the critical reasons for that is the country’s zero tax policy.
The United Arab Emirates attracts people from all over the world to live and work here. To avoid paying double tax and for your company to be exempt from paying tax, you’ll need a Tax Residency Certificate.
It takes just a few days to obtain one, and the process is straightforward. Trade License Zone has helped thousands of individuals and companies relocate to Dubai and take advantage of its tax environment.
In this article, we’ll guide you through the process, covering the following:
- What are the types of taxes in Dubai, UAE?
- What is a Tax Residency Certificate?
- How can I get a Tax Residency Certificate in Dubai or the UAE?
- Tax Residency Certificate in Dubai – Individuals
- Tax Residency Certificate in Dubai – Company
- Do residents of Dubai pay taxes?
- Working with Trade License Zone
What are the types of taxes in Dubai, UAE?
Dubai is renowned for its zero-tax policies, and these are a massive draw for foreign investors and entrepreneurs starting businesses in the UAE. However, there are other types of taxes to be paid in Dubai.
There are two types of taxes in Dubai, UAE. In this section, we’ll cover both to give you a deeper understanding of the Dubai tax system.
1: Corporate Tax
Most companies in the UAE pay 0% tax. According to the UAE Ministry of Finance, only foreign banks operating in Dubai and companies in specific sectors are liable for 20% tax on their corporate income.
To take advantage of this benefit from the UAE tax regulations and avoid paying corporate tax, a business must have a Tax Residency Certificate. The UAE’s Ministry of Finance issues these certificates to compliant companies.
To be eligible, a company must be incorporated under Emirati law, be based in the UAE, and have its directors resident in the UAE.
2: Individual Tax
As we mentioned earlier, individuals living in Dubai are not taxed on their personal incomes. They do not pay inheritance, gift, or wealth taxes in the UAE, but they are not exempt from paying municipal taxes.
An individual is still liable for municipal tax on residential property, which is calculated at 5% of the property’s annual rental value. Individuals must also pay 5% VAT (Value Added Tax) on some consumable goods.
For ex-pats living and working in the UAE, the UAE government has signed 88 double-taxation treaties with various countries around the globe. This means that ex-pats are not taxed twice on the same earnings.
What is a Tax Residency Certificate?
A Tax Residency Certificate means that a person (or business) is a tax resident. A Tax Residency Certificate (also called a Tax Domicile Certificate in some sectors and countries) is a legal document issued by the UAE’s Ministry of Finance that proves that you pay taxes to the government and enables you to benefit from the UAE’s double taxation avoidance agreements. These Tax Residency Certificates are valid for one year.
The Tax Residency Certificate is available to individuals who spend at least 183 days a year in Dubai (during the most recent tax year period).
Businesses can apply for a Tax Residency Certificate (sometimes referred to as a Tax Domicile Certificate in some circumstances), whether they are based in a Free Zone or on the Mainland. Offshore companies (also known as international business companies) are not eligible for Tax Residency Certificates. They must apply for a Tax Exemption Certificate instead.
For individuals and businesses alike, a Tax Residency Certificate can be used to reclaim any taxes paid in the same tax year period as the year in which you relocated your business to Dubai or settled in Dubai as an ex-pat.
How can I get a Tax Residency Certificate in Dubai or the UAE?
There are three simple steps to getting a Tax Residency Certificate in Dubai or the UAE.
Step 1: Application
Firstly, the applicant (whether a business or an individual) must create an account on the UAE’s Ministry of Finance’s website.
Step 2: Complete Forms
The Ministry of Finance’s website requires that you complete an online application form. To complete the application, you must also submit the required documents in PDF or JPG format. We have outlined the required documents in the sections below.
Step 3: Payment
Once your application has been approved, you will be notified to complete the process by making payment. A Tax Residency Certificate costs between AED 2,000 and AED 2,500 for individuals and AED 10,000 to AED 11,000 for businesses.
Tax Residency Certificate in Dubai – Individuals
We have outlined above what a Tax Residency Certificate is and what it means for individual taxpayers. Individuals are only eligible for a Tax Domicile Certificate after residing in Dubai for more than six months. It also entitles the ex-pat to avoid paying double tax through the UAE’s double taxation avoidance agreements with 88 other countries.
The required documents for an Individual Tax Residency Certificate are:
- A copy of your passport and Emirates ID
- A valid UAE resident visa
- Six months of bank statements from a UAE bank
- Your employment contract
- Proof of income in the UAE (such as a salary certificate or a trade license)
- A certified copy of a residential lease agreement (or a title deed)
- A report from the UAE’s General Directorate of Residency and Foreigners Affairs that lists the individual’s duration of stay in the UAE (with a minimum of 183 days)
Tax Residency Certificate in Dubai – Company
Businesses that apply for a Tax Residency Certificate in Dubai must also submit the necessary documents required for their application process to be successful.
The list of documents required for a company’s Dubai Tax Residency Certificate is as follows:
- A copy of its Memorandum of Association (MoA)
- A copy of its trade license
- Passport copies of the company’s owners/partners/directors
- Copies of the company owners/partners/directors’ valid UAE resident visas and Emirates IDs
- A copy of the company’s audited financial accounts
- Certified copy of bank statements (six months) from the company’s local bank in the UAE
- A copy of the office lease agreement for the company’s premises in the UAE
Do residents of Dubai pay taxes?
Yes, residents of Dubai do indeed pay taxes – but not on their personal incomes. As we have already mentioned, individuals must still pay municipal taxes on residential properties and a 5% VAT rate on some consumable goods.
Working with Trade License Zone
When you partner with a business setup expert such as Trade License Zone, you will be helped throughout the process of business setup in the UAE. From helping you with your trade license, UAE tax certificate and UAE Tax Residency, we will help you to choose the best legal entity for your company. We will also guide you on the UAE’s double taxation agreements to avoid double taxation.
Partnering with Trade License Zone will save you from the frustration of unnecessary delays or rejections and simplify the entire process.
The specialists at Trade License Zone can get started as soon as you provide us with some basic documentation. After that, just sit back and let our team take care of the rest. It really is that simple.