UAE CT Update| Issuance of Tax Residency Certificate for the Purposes of International Agreements

On October 16, 2023, the Ministry of Finance has issued a Ministerial Decision No. 247 of 2023 on Issuance of Tax Residency Certificate (TRC) for the purposes of an International Agreement.

Clause 2 of Article 6 of the Cabinet Decision No. 85 of 2022 on Determination of Tax Residency provided that a separate decision will be issued by the Minister specifying the form and manner of issuing certificates for determining the tax residency for the purposes of the International Agreement.  This Decision further defines International Agreement as any bilateral or multilateral agreement, or any other agreement to which the UAE is a party, that has been ratified by the parties.  It also defines TRC to mean a certificate issued by the FTA proving that the Person is a Tax Resident in the State.

In this relation, the aforesaid Ministerial Decision is issued which provides that a Person who meets the conditions of tax residency in the UAE pursuant to the relevant International Agreement may make an application to the FTA to obtain a TRC for the purposes of that International Agreement.  The application will be approved by the FTA subject to satisfaction of conditions of tax residency in the UAE in accordance with the provisions of the relevant International Agreement.  Once approved, the TRC will be issued in the format specified in the Ministerial Decision or in any other form acceptable to the FTA.  Further, for the purpose of this Ministerial Decision, “Person” shall mean a Juridical Person (i.e. Legal entities incorporated, formed or recognized in accordance with the legislations in force in the UAE) as well as Natural Person (i.e. Individual having their usual or primary place of residence and the center of his financial and personal interest in the UAE who is physically present in the UAE for a specified period).

The aforesaid is in line with the global tax practice of obtaining a TRC from the Revenue Authorities by Taxable Persons intending to avail the benefits under the International Agreements.  Given this, TRC will now become a crucial document to be obtained from the FTA before any recourse / benefit is to be availed by a Taxable Person under the International Agreements which will include Double Taxation Avoidance Agreement entered between UAE and other countries.

In case you require any assistance in obtaining a TRC, please contact [email protected]