How to Get a Tax Clearance Certificate in UAE

Obtaining a Tax Clearance Certificate in UAE is an important action for companies and people looking to prove their compliance with local tax regulations. This document is often required when closing a business, selling property, or relocating outside the country. In this blog, we will describe the process of getting a Tax Clearance Certificate in UAE, including what it is, why you need it, and how to apply for it.

What is a Tax Clearance Certificate?

In the UAE, a Tax Clearance Certificate is important for showing that a business or person has paid all their taxes or doesn’t owe any taxes. This certificate proves that you are responsible for your finances. The UAE Federal Tax Authority (FTA) has made it easy to request this certificate through an online portal.

Having this certificate in your office shows that you follow tax laws. But it’s not just for display; this certificate is vital for numerous business activities.

Why Do You Need a Tax Clearance Certificate?

The Tax Clearance Certificate in UAE shows that a business follows tax rules, helping to avoid fines and keeping a good reputation. This certificate is very important when selling a business, closing a company, or deregistering from VAT because of low sales.

Authorities or other parties often ask for this certificate during business sales, closures, and ownership changes, or for bank approvals and visa applications. It proves that the business has taken care of its tax duties properly.

Legal Basis for Tax Clearance in the UAE

The UAE introduced the tax clearance certificate to ensure businesses follow tax laws. To get this certificate, you must have no unpaid taxes. Not having this certificate can cause problems for your business.

Applying for a tax clearance certificate might lead to a tax audit. This audit checks if you owe any taxes. If you are registered for tax, audits are normal. If you are not registered, you need to prove to the FTA that you don’t have to be. This system makes sure all businesses pay their taxes and keeps the business environment fair and clear.

Eligibility Criteria for Applicants

1. Individual Applicant Requirements

To get a Tax Residency permit Certificate (TRC), individuals must live in the UAE for at least 183 days in the year they apply. Foreign and offshore company branches cannot get a TRC because they are not considered UAE residents.

2. Corporate Entity Requirements

Companies must be founded in the UAE for at least one year prior to making an application for a TRC. To get a Commercial Activity Certificate (CAC), companies must be VAT-registered in the UAE. The CAC confirms its business activities in the country.

3. Special Considerations for Non-Residents

Non-residents must show strong evidence of their stay and economic connections to the UAE to get tax certificates. This includes documents that show their physical presence and financial interests. Non-residents need to carefully document their stays and financial activities to meet the FTA’s strict requirements.

How to Apply for a Tax Clearance Certificate in UAE

Here is a step-by-step UAE tax clearance guide to help you through the process –

1. Ensure All Tax Filings Are Up to Date

Before you apply for a Tax Clearance Certificate in Dubai or any other part of the UAE, make sure that all your tax returns have been filed and all tax payments have been made.

This includes –

• VAT Returns – Ensure that all your Value Added Tax (VAT) returns are submitted.
• Excise Tax – If applicable, ensure that all excise tax returns are filed.

2. Gather Required Documents

Prepare all necessary documents for your UAE tax certificate application.

The required documents typically include –

• Passport Copy – A copy of your passport or the passport of the business owner.
• Trade License – A copy of your trade license if you are applying as a business.
• Tax Registration Number (TRN) – Your TRN is issued by the FTA.
• Bank Statements – Recent bank statements showing tax payments.

3. Submit the Application

The application for a Tax Clearance Certificate in UAE is done online through the Federal Tax Authority’s e-Services portal.

Here’s how to do it –

1. Log In – Visit the FTA’s e-Services portal and log in with your credentials.
2. Navigate to the Application – Go to the ‘Tax Clearance Certificate’ section.
3. Fill in the Details – Complete the application form with the demanded elements, such as your TRN, business details, and contact information.
4. Upload Documents – Upload the necessary documents, including your passport copy, trade license, and bank statements.
5. Submit the Application – Check your application and present it for processing.

4. Pay the Application Fee

There may be a fee associated with your UAE tax clearance certificate application. Don’t forget to pay the fee through the FTA’s portal to avoid any delays in processing your application.

5. Await Confirmation

After submitting your application and payment, the FTA will review your request. This procedure may take certain days, based on the complications of your tax affairs. You will be notified via email once your application is processed.

6. Receive Your Tax Clearance Certificate

Once your application is approved, you will receive your Tax Clearance Certificate in UAE. This certificate can be downloaded from the FTA’s e-Services portal. Make sure to keep a copy of this certificate for your records.

Common Issues and How to Avoid Them

• Incomplete Filings – Make sure all tax returns are filed and all taxes are paid before applying.
• Incorrect Information – Verify all details in the application to prevent errors.
• Missed Deadlines – Apply well in advance to avoid any issues with deadlines, especially if you need the certificate for a specific transaction.

Conclusion

Obtaining a Tax Clearance Certificate in UAE is a straightforward process if you follow the steps outlined in this guide. Ensuring that all your tax filings are up to date, gathering the necessary documents, and carefully completing your UAE tax certificate application will help you avoid common mistakes. Whether you are closing a business, selling property, or relocating, having this certificate demonstrates your compliance with UAE tax laws and provides peace of mind.

By following this comprehensive UAE tax clearance guide, you can handle the procedure with faith and ensure that your tax matters are settled. Remember, if you need further assistance, seeking help from a Start Any Business can make the process even smoother.

Also Read: The Ultimate Guide to Start Your Business in Dubai as a Foreigner