In October 2024, the UAE Federal Tax Authority (FTA) issued its official Tax Resident and Tax Residency Certificate (TRC) Guide, clarifying how residency is determined and TRCs are obtained under both UAE law and Double Taxation Agreements (DTAs).
For the 2025 tax period, the guide introduces updated criteria, application procedures, and documentation requirements that shape compliance, cross-border planning, and access to treaty benefits.
This article outlines the key provisions of the FTA’s official guide and highlights what businesses need to consider when assessing tax residency and applying for a TRC in 2025.
How UAE Corporate Tax Residency Differs from DTA Tax Residency
There is a key distinction between being a “Resident Person” under UAE Corporate Tax (CT) Law and being a “Tax Resident” under a DTA.
While both designations involve residency, their implications differ:
- CT Resident Person status determines whether an entity is within the scope of UAE Corporate Tax.
- Tax Resident status under a DTA affects whether a business can access treaty benefits, such as reduced withholding tax or exemption from double taxation.
The FTA guide emphasizes that these two concepts are governed by different legal frameworks, and companies must assess each independently based on the specific facts and treaty provisions applicable to them.
When Is a Company a Resident Person Under CT Law?
A juridical person is treated as a Resident Person for Corporate Tax if it satisfies either of the following:
- It is incorporated or otherwise established in the UAE, regardless of where it is managed.
- It is foreign incorporated, but its Place of Effective Management (POEM) is located in the UAE.
This includes a broad range of entity types such as:
- Mainland Limited Liability Companies (LLCs)
- Free Zone entities
- Private and Public Joint Stock Companies (PJSCs)
- Civil companies and certain offshore companies
- Foundations and trusts
Importantly, entities formed in UAE Free Zones are also considered UAE tax residents and are eligible to apply for a TRC even if they benefit from the 0% Free Zone CT regime, provided they meet the residency requirements.
Place of Effective Management (POEM): Strategic Control Matters
For foreign-incorporated companies, the POEM test is the determining factor in establishing UAE tax residency.
The POEM refers to the location where senior management and commercial decisions are made, rather than where routine operations take place. It is a substance-over-form evaluation that emphasizes strategic-level governance.
How POEM Is Determined
The FTA outlines three key tests to assess POEM:
1. Board of Directors Test
A company’s legal documents may place management authority with its board. The FTA will examine whether the board actively makes high-level decisions or merely approves decisions made elsewhere.
2. Delegation of Authority Test
Even if the board holds legal authority, the FTA will review and make the key decisions. If these are delegated to senior executives operating in the UAE, this could establish POEM in the country.
3. Shareholder Activity Test
In cases where shareholders exert undue influence over board decisions, the FTA may view the shareholder as the true decision-maker. This may shift POEM to wherever the shareholder operates.
The FTA notes that only one POEM can exist, even if management is spread across multiple jurisdictions. Temporary or incidental decision-making in the UAE does not establish POEM.
TRC Eligibility and Application Timelines
To apply for a Tax Residency Certificate, businesses must select either:
- The current tax period, or
- A past 12-month period
The following timing rules apply for TRC applications in 2025:
| Entity Type | Earliest TRC Application Point |
| Juridical Person | After 3 months from the start of the selected tax period |
| Government / Controlled Entities | After 1 day into the selected tax period |
| Natural Person | Once the individual meets the required physical presence or POEM criteria |
Newly incorporated businesses must complete 12 months of establishment before they become eligible to apply, even if they have not yet filed a tax return
Importantly, a TRC cannot be requested for:
- A future tax period
- A period longer than 12 months
TRC Documentation Requirements
The FTA has updated and clarified documentation requirements for 2025. These vary by applicant type and whether the residency claim is under UAE law or a DTA.
| Applicant | Documents Required | Notes |
| Juridical Persons (Companies) | – Trade license or certificate of incorporation – Memorandum of Association – Corporate Tax registration number – Proof of authorised signatory – Evidence of POEM (if applicable) | Audited financial statements are no longer mandatory, provided the entity meets timing criteria |
| Natural Persons (under a DTA) | – Emirates ID and visa or passport with entry/exit records – Proof of income (e.g., salary certificate or contract) | Bank statements are no longer required |
| Natural Persons (under UAE law) | – All DTA documents above, plus: – Proof of work, business, or residence (if present in UAE 90 –182 days) – Evidence showing UAE as centre of financial and personal interests (if under 183 days) | Applies when residency is based on domestic law, not treaty provisions |
Understanding Tax Residency Under DTAs
Businesses must hold a valid TRC to claim benefits under the UAE’s network of DTAs. Each agreement has its own criteria, and the business must demonstrate it qualifies as a UAE resident as defined by the specific treaty.
This has practical implications:
- Exempt entities (e.g., Free Zone entities at 0% rate) may still qualify as treaty residents if considered “liable to tax” under UAE law.
- Government and Government-Controlled Entities are typically eligible to benefit under DTAs, unless excluded by treaty definitions.
Dual residency conflicts, where two countries claim residency, are resolved using tie-breaker provisions in the DTA to determine which country has taxing rights. These often rely on POEM or centre of vital interests.
Companies applying for a TRC for DTA purposes must evaluate treaty wording carefully and document their position accordingly.
FTA TRC Application Process & Cost
TRC applications are submitted online through the FTA’s e-Services portal.
- Processing time is generally 10 business days from complete submission.
- Fee: AED 500 payable to FTA per application (includes electronic TRC and stamping of one foreign tax form)
Applicants are advised to prepare supporting documentation in advance and maintain clarity on the period for which the TRC is requested.
What Businesses Should Do in 2025
The UAE tax regime requires companies to revisit internal governance, entity structure, and operational substance to align with UAE tax residency rules.
Key actions include:
- Reviewing board meeting records and POEM documentation
- Confirming CT Registration and entity establishment timelines
- Evaluating DTA eligibility before applying for a TRC
- Maintaining accurate financial and operational records
Proper classification as a UAE tax resident has significant implications for treaty access, withholding tax relief, and overall compliance risk management.
Conclusion
Under the UAE Corporate Tax regime, confirming tax residency and meeting TRC requirements are essential to benefit from DTAs and reduce risk. While the FTA guide sets out the process, businesses must ensure their governance, records, and decision-making reflect UAE residency. Entities relying on DTA relief should evaluate whether their structure supports a credible UAE tax residency position.
About SimplySolved
As a UAE FTA-approved Tax Agency, ISO 9001, 27001, and 42001 certified, SimplySolved provides comprehensive corporate tax and compliance solutions tailored to business needs. Supported by experienced consultants, we optimise tax residency assessments, Corporate Tax Registration and reporting, TRC applications, and cross-border structuring to ensure alignment with UAE regulations and treaty requirements.
We serve 100’s of clients acting to implement credible UAE Tax Residency positions, accessing treaty benefits, and maintaining compliance across all corporate tax obligations. Our approach combines practical guidance with structured processes, allowing businesses to focus on core operations while receiving reliable, cost-effective support from a trusted partner.
