On 10 August 2020, the UAE Cabinet of Ministers issued Cabinet Resolution No. 57 of 2020 (the “amended ES Regulations”) which replaces the original ES Regulations, along with updated Guidance clarifying the amended Economic Substance Regulations (Ministerial Decision 100 of 2020 dated 19 August 2020).

The amendments to the ES Regulations and Guidance introduce changes to the procedures and increased the importance of the Tax Residency Certificate supporting ESR exemption.

The UAE MoF has updated the information on its economic substance website (link Here).

As Documentary Evidence Under ESR

In addition to the normal application to provide benefits to other tax jurisdictions of tax residency status under the Double Tax Treaty arrangements, The amended ES Regulations introduce several exemptions to simplify the burden of compliance. In providing sufficient evidentiary proof of exemption under:

Entities that are tax residents outside the UAE

The UAE entity will need to submit a tax residence certificate or other documentation issued by the tax authority in the foreign jurisdiction in which it claims to be a tax resident to justify that it is treated as a local tax resident entity in that foreign jurisdiction.

Exempt entities must (i) file a notification and (ii) provide sufficient documentary evidence to substantiate and benefit from their exempt status.

New Administration & Processes

The body from where to obtain a TRC is also amended.

The UAE Federal Tax Authority has been appointed as the Assessing Authority for the ES Regulations. As such, TRCs are subject to revised processes and forms from 10th November 2020. 

Conclusion

If you are a business or individual requiring assistance in obtaining your Tax Residency Certificate, as an FTA-approved tax agent we provide complete service to prepare, submit and liaise with the Federal Tax Authority to successfully grant your TRC status.

Read about our approach and contact us to speak to a consultant.