If you are working in Dubai on an employment visa with an Emirates ID, and you are involved in crypto trading, forex trading, or any other kind of business, you might assume that your income in Dubai is completely tax-free and invisible to the Indian government. Many people think this means they never need to pay tax in India, whether they live in Dubai or India. However, this assumption is wrong.
How is your Dubai Income disclosed to the Indian Government?
The reason is India and the UAE have signed a Double Taxation Avoidance Agreement (DTAA) that allows them to share information between the two governments for tax purposes. So, without having the right information and protection, your Dubai income can still attract Indian tax. The solution is the Tax Residency Certificate, also called the Tax Domicile Certificate.
What is the Role of DTAA between India and UAE?
- DTAA (Double Taxation Avoidance Agreement) prevents double taxation between two countries.
- Article 28 of the DTAA allows India and the UAE to exchange information for tax purposes.
- If you are considered a tax resident of India, your global income (including Dubai earnings) is taxable in India.
- The Indian government can send a formal request to the UAE for your data.
If your income is undeclared in India, you can face:
- 30% income tax
- Interest charges
- Penalties of up to 300% for tax evasion
However, if you hold a Tax Residency Certificate from the UAE, your UAE-sourced income cannot be taxed by India. Since the UAE has no personal tax, no corporate tax, no capital gains tax, and no dividend tax, this income becomes completely tax-free.
What Information Can and Cannot Be Shared
Under DTAA Article 28, there are limits on what data can be exchanged.
| Type of Information | Can It Be Shared? |
Reason |
| Health or personal data | No | Against UAE law |
| Personal tax filings | No | UAE does not collect them |
| Business/industrial/professional secrets | No | Protected by confidentiality |
| Bank account data | Yes | Available with UAE government |
| Property ownership records | Yes | Available with UAE government |
To prevent banking and property data from being shared, you need a Tax Residency Certificate.
What are the benefits of Tax Residency Certificate / Tax Domicile Certificate?
The benefits of Tax Residency Certificate or Tax Domicile Certificate are enormous and this includes:
- Income Protection: UAE-sourced income is taxable only in the UAE. India cannot tax it.
- No TDS Deduction: Under Section 195 of the Indian Income Tax Act, TDS is deducted from payments to foreigners (for example, ₹1,00,000 becomes ₹70,000 after 30% TDS). With a Tax Residency Certificate, the payer cannot deduct TDS, and you receive the full amount.
- Prevents Tax Notices: The Indian government cannot request your income details from the UAE once Tax Residency Certificate is in place.
- Bank and Remittance Benefits: UAE banks accept Tax Residency Certificate as proof of residency, ensuring smooth remittances without deductions.
- Avoids Penalties: No risk of being fined for tax evasion in India on UAE-sourced income.
What is the eligibility criteria to get a Tax Residency Certificate or Domicile Certificate?
One can be eligible to get a tax residency certificate or domicile certificate through following two ways:
1. 183-Day Rule
If you are physically present in the UAE for 183 days or more, you are directly eligible.
2. 90-Day Rule (With Conditions)
Even if you stay 90 days or more, you can apply if you also have:
- A valid residence permit/visa
- A permanent place of residence (Ejari lease or property ownership)
- Proof of employment or active business in the UAE
What are the documents required for a Tax Residency Certificate or Domicile Certificate?
To apply for a Tax Residency Certificate in the UAE, you must submit the following documents with application form:
- Passport
- Emirates ID
- Residence visa (E-visa)
- Entry/Exit report (from ICP Immigration, showing travel dates in and out of UAE)
For the 90-day eligibility route, additional documents are required:
- Ejari/Lease Agreement or Property Title Deed (to prove residence)
- Financial Proof – salary slips, employment contract, or business income records
Stepwise Application process for Tax Residency Application in UAE
Apply through the ICP (Federal Authority for Identity and Citizenship) online portal.
- Government fee: about 1000 AED.
- Processing time: 10–15 days.
- Tax Residency Certificate is valid for 1 year.
- Renewal is mandatory every year. If not renewed, your residency status becomes unclear, and governments may resume information exchange.
Tax Residency Certificate vs Non-Tax Residency Certificate Situation in UAE
| Scenario | With Tax Residency Certificate | Without Tax Residency Certificate |
| Indian tax notices | No | Yes, possible |
| TDS on payments from India | No | Yes, 30% deducted |
| Income tax on UAE income | No | Yes, taxed as global income |
| Information sharing | No | Yes, upon request |
| Banking remittance deductions | No | Possible |
Alternative Path: Dubai Company Registration for Tax Residency and saving taxes
If you cannot meet the 90-day or 183-day stay requirement, you can still become a tax resident by setting up a Free Zone company.
Advantages of Dubai Company Registration (Free Zone)
- From day one, the company is recognized as a tax resident of the UAE.
- Income earned through the company is UAE-sourced and protected.
- No matter where you live (India, UAE, or elsewhere), your income remains tax-free.
- The only requirement: management and control must be in the UAE.
You can also set up a mainland company depending on your needs, but Free Zone is the fastest way to secure tax residency.
FAQs on Tax Residency in Dubai
1. What is the validity of a Tax Residency Certificate?
A Tax Residency Certificate is valid for one year. It must be renewed annually to maintain tax residency status.
2. How long does it take to get a Tax Residency Certificate?
Processing typically takes 10–15 days once the application and documents are submitted online.
3. What happens if I don’t renew my Tax Residency Certificate?
If your Tax Residency Certificate is not renewed, your residency status becomes unclear, and the UAE may share your financial information with India under DTAA rules.
4. Can I apply for a Tax Residency Certificate with only 90 days in the UAE?
Yes, if you also have a valid residence permit, a permanent place of residence (lease or ownership), and proof of employment or business activity.
5. What if I cannot stay in the UAE for 90 days?
You can set up a Free Zone company. From day one, it is considered a UAE tax resident, and its income is protected from Indian taxation.
6. Can freelancers apply for a Tax Residency Certificate?
Yes, freelancers with a UAE residence visa, Emirates ID, and proof of business income can apply for Tax Residency Certificate if they meet the eligibility requirements.
7. Does Tax Residency Certificate stop TDS on payments from India?
Yes. Under Section 195 of the Indian Income Tax Act, TDS is normally deducted on foreign payments. With a Tax Residency Certificate, no TDS is deducted, and you receive full payment.
8. What documents are mandatory for Tax Residency Certificate?
Passport, Emirates ID, residence visa, and entry/exit report are mandatory. For 90-day eligibility, lease or property papers and proof of income are also required.
9. How much does a Tax Residency Certificate cost?
The government fee is around 1000 AED.
10. Is Dubai company registration a guaranteed path to Tax Residency Certificate?
Yes. Free Zone company registration gives you tax residency from the very first day, provided management and control are in the UAE.
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