Tax residency, also referred as ‘fiscal residency’ or ‘residence for tax purposes’, is the residence in the country, in which you are legally obligated to pay personal income tax.
A tax residency certificate (TRC), which you’ll sometimes see as a tax domicile certificate (TDC), is an official document that the relevant authority will issue to confirm the country of tax residence for a company or legal entity. You can get a certificate issued to a company registered in the UAE as well as for individuals residing in the UAE. Once you receive your tax residency certificate, it will have a year’s validity upon the date of issue.
Being a citizen and being a tax resident aren’t exactly the same. ‘Citizen’ is a person who legally belongs to a country, and ‘resident’ is used, generally, for a person who is legally living or working in a particular locality.
If any individual stays in a country for 183 days or more (one-half of the tax year) – he or she is legally considered as a tax resident. The corona pandemic has made many countries to introduce new measures in order to attract more foreign investment. Some countries now have decreased the number of days from 183 to lesser amount.
A number of countries also offer ‘citizenship by investment’, programs where money — normally invested in real estate — can actually get you a second passport, and the status that comes along with owning citizenship or tax residency in another country.
The benefits of becoming a tax resident in UAE:
Taking advantage of the double taxation avoidance agreements between the UAE and your country to avoid income taxes back home.
Claiming back taxes if you paid them in the same year when you became a UAE tax resident.
Ensuring fairness across the board for taxpayers, companies or individuals, and protecting the national economy.
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