UAE Tax Update: UAE Tax Clearance Certificate from Federal Tax Authority

Apr 2020

The UAE Federal Tax Authority (FTA) has very recently introduced a new feature on the portal for Tax registered persons which is to seek a "Tax Clearance Certificate" from the Authority. This feature is available as soon as the person logs in to their respective portal.

After logging into the portal, you will need to fill up a form. The details which are required to be filled up are:

  1. Trade License number of the Company

The license number will automatically appear in the drop-down list. You need to choose from the given options in the drop-down.

  1. Reason:

The next step is to mention what is the reason to request the certificate. The purpose of requesting the certificate will be mentioned in the drop-down menu from which it has to be selected from the drop-down menu. The following reasons are listed therein as a purpose for seeking the Certificate:

  1. Change ownership
  2. Below mandatory threshold
  3. Below voluntary threshold
  4. Business closing

The first (1) and the second (2) fields in the form are mandatory information which must be provided while filling up the form. The applicant can also put comments on the webpage  and upload any documentary evidence in the additional fields available in the form.

Use of the Certificate

The official guideline relating to the purpose and use of the Tax Clearance Certificate is yet to be released by the UAE Federal Tax Authority (FTA). It has been predicted that this certificate will fulfil the function as a "No Liability Certificate" which will be utilized by the registrants to furnish any information to the relevant authorities who may request the same prior to the change of ownership of the Company or for cancellation of the trade license.

In the current situation, some people face a practical difficulty at the time of liquidating their Company as the relevant Authorities and Liquidators may require a UAE Tax Clearance Certificate prior to issuing the liquidators report or trade license cancellation. Hence this is a welcome move by the UAE Federal Tax Authority to address the needs of the Tax registrants.

It is also pertinent to note that the trade license detail is mandatory information, and only one of the four reasons (mentioned above) can be selected in the application. This, in effect, limits the issuance of this Certificate to registered Companies alone and for the sole purpose of reasons cited above. Further, no fee has been prescribed for issuance of this Certificate. 

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