Tax Clearance Certificate in the UAE

This article is written by Marina Zhirnova, Managing Partner at UPPERCASE Accounting 

A Tax Clearance Certificate in the United Arab Emirates (UAE) is a crucial document  indicating that a tax-registered entity has either paid all its outstanding tax debts or is not  responsible for any tax payments. This certificate plays a significant role in ensuring  compliance with UAE tax regulations and maintaining the reputation of businesses and  individuals. 

To confirm your compliance with all tax requirements in the UAE, the best course of action  is to obtain a Tax Clearance Certificate. Issued by the Federal Tax Authority (FTA), this  certificate serves as proof that you have settled all your tax liabilities in the UAE. 

What is a Tax Clearance Certificate? 

A Tax Clearance Certificate in the UAE verifies that a tax-registered entity has either paid all  its outstanding tax debts or is not liable for any taxes. This certificate is a vital document for  demonstrating tax compliance and can be used to prove that you have no more tax liabilities  in various situations, such as: 

• When another entity wants to acquire your business 

• During liquidation or bankruptcy proceedings 

• When you need to deregister from VAT due to sales proceeds falling below  mandatory and voluntary thresholds 

Importance of the Tax Clearance Certificate 

The FTA uses the Tax Clearance Certificate to promote compliance with UAE tax laws and  regulations. If you have no pending tax liabilities, it is advisable to obtain this certificate to  ensure smooth business operations. Without it, you may face difficulties in fulfilling your  business requirements, such as: 

• Mergers and acquisitions 

• Business cessation 

• Ownership transfers 

• Securing banking facilities 

• Issuance of visas 

How to Obtain a Tax Clearance Certificate 

To obtain a Tax Clearance Certificate in the UAE, you need to apply through the EmaraTax  platform. Here’s a step-by-step guide: 

1. Log in to EmaraTax: Access the EmaraTax platform using your credentials or UAE  Pass.

2. Navigate to the Clearance Certificate Option: Go to the ‘Other Services’ section and  click on the ‘Clearance Certificate’ option. 

3. Start a New Request: Begin a ‘New Request’ and fill out the application form with  your business details, including trade license information in English and Arabic.  Specify the reason for the certificate request, such as changes in ownership or  business closure. 

4. Upload Necessary Documents: Upload the required documents, which may include  financial statements and a declaration letter. Additional documents like a sale  contract or proof of business cessation may be required depending on your specific  situation. Ensure all financial figures are presented in AED. 

5. Review and Submit: After completing and reviewing the application, submit your  request along with a filled-in declaration form. 

6. Pay the Fees: Confirm the current rates for the certificate, which vary depending on  your tax status. Make the payment through the EmaraTax platform. 

Required Documentation: 

For Individuals: Passport, residence permit, Emirates ID, residential lease agreement, proof  of income, bank statements, entry and exit report, and evidence of permanent residence in  the UAE. 

For Legal Entities: Trade license, memorandum of association, authorization proof, audited  financial statements, and bank statements. 

For Government Entities: A copy of the decree or government decision, trade license, and a  request letter from the entity. 

Processing Time and Compliance 

The FTA typically reviews applications within five business days. If your application is  successful, you will receive the Tax Clearance Certificate digitally. If additional information  is required or if the application is rejected, the FTA will notify you by email. 

Conclusion 

Securing a Tax Clearance Certificate in the UAE is a crucial step for businesses and  individuals to ensure compliance with tax laws and facilitate various business activities.  Understanding the eligibility criteria, application process, and the importance of this  document will help manage tax obligations effectively and support business operations. By  following this guide and maintaining diligent records, you can navigate the tax compliance  landscape in the UAE with confidence.