In the present scenario of the world, there is easy access to transportation and information. The use of high-speed internet and Globalization has made it possible for businesses to set up their companies at different locations all over the world. This allows them to take advantage of different markets in the world.
As with all the things, this also has a negative side. If the management of the business is not careful, they might be paying taxes at two different locations. This issue can be resolve by a business in the United Arab Emirates by utilizing a Tax Residency Certificate (TRC).
Let’s know more about Tax Residency Certificate and how it can affect a business in a positive way.
What is a Tax Residency Certificate?
A Tax Residency Certificate (also known as Tax Domicile Certificate) can be described as an official document that is issued by the relevant authority which will tell us the jurisdiction in which the business entity needs to pay its taxes. This Tax Residency Certificate is valid for a duration of one year from its issuance. This certificate is issued in the United Arab Emirates by the Federal Tax Authority (FTA).
This certificate can be availed by both individuals and business entities in the UAE. Business entities which have been conducting business activities for at least one year are eligible to apply for the TRC.
The applicants of the certificate need to open an online account with the Ministry of Finance (MoF) and make necessary payments to the authority in order to receive the Tax Residency Certificate.
What are the Benefits of a Tax Residency Certificate?
The advantages of tax residency are available to both individuals as well as business entities. The benefits which are available to a business are as follows:
- Assist in the avoidance of paying the taxes in two jurisdictions.
- It makes the relevant tax authority aware of the status of the corporate in the jurisdiction.
- It can be used to tackle any hurdles in the tax process of import and export.
- A Tax Residency Certificate helps to strengthen the relationships between two or more countries as it promotes businesses to conduct their activities on an international level.
Availing a Tax Residency Certificate can be very valuable for a business as it will allow businesses to be more profitable while conducting businesses on an international level. It is recommended that a business should first consult the experts so that they can help in analysing the present situation of the business and also suggest solutions for the present predicament.
Documents that are required for a Company to Obtain a TRC
There are a lot of documents that are required to be prepared by a company in order to obtain a Tax Residency Certificate (TRC). These documents are as follows:
- All the documents required by a company during the formation of the company.
- A letter of request from the Company.
- Copies of passport of the shareholder, the Visa Page and the identification of the shareholders.
- The audited financial statements of the company.
- The bank statements of the company for the last six months.
- Copy of the Memorandum of Association (MoA) as well as a copy of the trade license of the company.
- The organizational structure is followed by the company (if the company is not a sole company).
- A copy of the Tenancy Contract and also a copy of EJARI (Rent Agreement)
These are the documents that are required by a business to provide the authority to avail a Tax Residency Certificate (TRC). With so many benefits to a business, it is recommended that it should avail a TRC, especially if the company conducts business internationally. The management should take the assistance of professionals while availing a Tax Residency Certificate.
After the setting up accompanies, there are a number of services required by a business which will help in conducting the day to day business activities. If you are looking for a reputed and professional firm that provides such services, then you can look into the services provided by JAXA Chartered Accountants.
There are many services provided by JAXA Chartered Accountants such as Accounting and Bookkeeping Services, Auditing and Assurance services, VAT and Tax related services and many more. To know more about the services provided by JAXA, feel free to Contact Us. We will be happy to assist you in your business journey.