Complying with tax regulations is mandatory in every country, including the UAE. To demonstrate your compliance and avoid penalties, you need to obtain a tax clearance certificate from the Federal Tax Authority (FTA).
A Tax Clearance Certificate in the UAE shows that a company or individual has met their tax obligations. This document is mandatory for various business transactions and proves compliance with the country’s tax laws.
This article provides a close look at the importance, eligibility criteria, and application process of obtaining a Tax Clearance Certificate in the UAE. Whether you are an entrepreneur or an individual aiming to keep a clean financial record, Now Consultant assists you in obtaining a tax clearance certificate, helping you effectively manage the tax compliance landscape.
What Is a Tax Clearance Certificate?
In the UAE, a Tax Clearance Certificate is essential for demonstrating that a tax-registered entity has either fulfilled all its tax obligations or is not liable for any tax payments. This certificate reflects the taxpayer’s dedication to meeting their financial responsibilities. The UAE Federal Tax Authority (FTA) has integrated a feature into the taxpayer’s online portal, simplifying the process of requesting a tax clearance certificate.
Displaying this certificate in your office shows your adherence to tax laws. However, this certificate serves a significant purpose beyond mere documentation; it is an essential requirement for various business-related processes.
Importance of the Tax Clearance Certificate:
In the UAE, a Tax Clearance Certificate serves as a mark of compliance, assisting companies in avoiding penalties for non-compliance and preserving their reputation as law-abiding companies. This certificate becomes especially significant during business acquisitions, company wind-ups, or when deregistering from VAT due to a decrease in sales below specific thresholds.
A Tax Clearance Certificate is a document of integrity frequently requested by authorities or other parties during mergers and acquisitions, company liquidations, and ownership changes. It is also required for the approval of banking facilities and as a prerequisite for visa issuance.
Eligibility Criteria For Applicants:
The introduction of the tax clearance certificate by the FTA is a strategic initiative. Obtaining the tax clearance certificate requires maintaining a clean record with the FTA, free of any outstanding liabilities. Following is the eligibility criteria for applicants to apply for Tax Clearance Certificate in the UAE:
1. Individual Applicant Requirements
To qualify for a Tax Clearance Certificate (TCC) in the UAE, individuals must reside in the country for at least 183 days during the financial year of the application. This residency requirement is mandatory for determining eligibility. However, branches of foreign and offshore companies do not qualify as residents and are therefore ineligible for a TCC.
2. Corporate Entity Requirements
Legal entities must be established in the UAE for over a year before applying for a Tax Clearance Certificate (TCC) to ensure a significant presence in the country. Additionally, entities applying for a TCC must be VAT-registered in the UAE, as the certificate verifies their commercial activities within the nation.
3. Special Considerations for Non-Residents
Non-residents seeking tax certificates in the UAE must prepare a solid evidence of their presence and economic connections to the country. This includes providing documentation of physical residency and financial engagements. Non-residents need to display the records of their stays and financial transactions to meet the criteria set by the FTA.
UAE Tax Clearance Certificate Sample:
Documentation Needed for Initial Assessment:
For Individuals:
To apply for a Tax Clearance Certificate (TCC), individuals are required to submit various documents, including their passport, residence permit, Emirates ID, residential lease agreement, proof of income, bank statements, entry and exit reports, and evidence of permanent residency in the UAE.
For Legal Entities:
Legal entities must furnish their trade license, memorandum of association, authorization proof, audited financial statements, and bank statements as part of the documentation required. Government entities are mandated to provide a copy of the decree or government decision, trade license, and a formal request letter from the entities.
Applicants are required to provide a trade license and a formal request letter when applying for a Tax Clearance Certificate (TCC). The documentation needed for a TCC may vary depending on factors such as the applicant’s stay duration in the UAE and other relevant considerations.
Application Process for Tax Clearance Certificate:
You can apply for a Tax Clearance Certificate (TCC) through the Emaratax portal, which is available 24/7. The application process is efficient, taking an average of 45 minutes to complete. Once a complete application is received, processing typically takes five business days. TCC is valid for one year from the start of the chosen financial year.
Step 1:
In first step, you need to log in to the EmaraTax platform using your login credentials or UAE Pass. If you don’t have an EmaraTax account, you can sign up on the website. Once logged in, you will see the online user dashboard. We can assist you in creating an account for Emaratax portal
Step 2:
Go to the ‘Other Services’ section and select ‘Clearance Certificate’. Start a ‘New Request’ and complete the application form with your business information, including trade license details in English and Arabic. Select here the reason for the certificate request, such as ownership changes or business closure or for confirmation purposes.
Step 3:
In step 3, you need to upload the required documents, such as financial statements and a declaration letter. Some additional documents, such as a sale contract or proof of business closure, may also be required depending on your circumstances. It is mandatory to present all financial figures in AED. After the completion of the application, submit your request and a filled-out declaration form.
Online vs Offline Submission Options:
The EmaraTax platform provides a convenient online system for application submissions, eliminating the necessity for paper-based processes. Make sure you have digital copies of all required documents to facilitate a smooth application process.
Payment of Fees and Dues:
The fees for obtaining a certificate depend on its type and your tax status. For example, a TCC involves a submission fee, with additional charges depending on whether you are a tax registrant and your entity type. There is an extra fee for each printed certificate if requested. It is advisable to verify the current rates with Now Consultant experts before applying, as they may be subject to change.
Expected Timeframe for Processing:
The FTA usually processes the applications within five business days. If you opt for a printed certificate, expect the same timeframe after finalizing payment. For applications involving a tax form for FTA attestation, processing takes five working days from the receipt of the completed form and payment.
You can easily check your application’s progress through the EmaraTax dashboard. Upon successful submission, you will receive a reference number, and the clearance certificate will be issued accordingly.
If the FTA requires further details or rejects the application, you will be notified through email and may need to provide additional information or initiate a new request. It is significant to ensure your tax records are accurate and up to date before applying to prevent potential audits or liabilities.
How Can We Help You?
A Tax Clearance Certificate is of great importance for individuals and businesses in the current evolving tax environment of the UAE. If you do not have a Tax Clearance Certificate (TCC), your tax compliance and credibility are uncertain, which may affect your business reputation and overall growth. T
here exists a possibility of mistakes in applying and document submission for TCC, and in case of non-compliance with FTA, your business may suffer heavy losses or fines.
The best option is to hire Now Consultant to get a Tax Clearance Certificate (TCC) for your business. We assist you in applying for the TCC on the FTA’s portal, ensuring a smooth, accurate, and complete process for timely receipt of the certificate.
We help you at every step of applying for the clearance certificate, collecting the required documents, and meeting the eligibility criteria while adhering to UAE regulations.
