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As the E-invoicing in Saudi Arabia is growing, the businesses in major cities such as E-invoicing in Riyadh are moving towards doing digital tax compliance. The Tax Residency Certificate (TRC) is one of the important documents for individuals and businesses and the Zakat, Tax and Customs Authority (ZATCA) is continuing to modernize the tax system. This certificate is very important in order to prevent double taxation, to benefit from the tax treaties that Saudi Arabia has with other countries, and to ensure that the Saudi tax compliance is met.
In the Kingdom, Tax Residency Certificate in KSA is a vital process for businesses and individuals to authenticate their tax residency status. A TRC is important whether you are earning income abroad as an expatriate or the company you belong to is involved in international transactions, to ensure compliance with Saudi tax laws and to avail yourself of tax exemptions or reductions under double taxation treaties (DTTs). This article will lay out all that you want to know about Tax Residency Certificate, including eligibility, steps to apply for the same and its benefits.
The tax system of Saudi Arabia is based on residence, which means that a person or a company’s tax liability is based on their residence status. Zakat, Tax, and Customs Authority (ZATCA) issues Tax Residency Certificate (TRC) to officially verify tax residency. This is a document of proof that an entity or individual is considered as a tax resident of Saudi Arabia for income tax purposes. It is very helpful for those who are involved in international financial activities, and it will help them determine their tax status in the Kingdom.
The TRC is necessary for people and businesses who want to take advantage of Saudi tax regulations and double taxation avoidance agreements (DTTs). These agreements are aimed at preventing double taxation of income and giving relief to taxpayers and to promote cross border trade and investment. A TRC is obtained by businesses and individuals to assert tax treaty benefits and claiming a lower withholding tax of foreign income, and also to maintain international tax regulations.
A Tax Residency Certificate (TRC) is available to individuals who have resided in Saudi Arabia for more than 183 days in the preceding 12 month period. It is for both expatriates and Saudi nationals who meet the residency criteria. The applicant needs to use a valid passport, a residency permit (Iqama) and the supporting documentation on their physical presence in the Kingdom such as rental agreements, utility bills, or bank statements.
They may also have to submit income related documents to prove their tax status as well. These applications are then reviewed by the Zakat, Tax, and Customs Authority (ZATCA) which verifies residency and whether the property complies with tax regulations before an issuance of the certificate so the taxpayer can claim tax benefits or avoid paying double to any international agreement.
Getting a Tax Residency Certificate (TRC) in Saudi Arabia is a very easy matter. Either online through the ZATCA portal or in person at a ZATCA branch, you can apply. Here is a step by step guide for both methods below.
You can apply for a TRC electronically through ZATCA website or their mobile app. The process is straightforward:
If the TRC is approved, you can download it directly from the portal in quick and easy fashion.
If you are an in person type, you can apply for a Tax Residency Certificate at the nearest ZATCA branch office. When visiting the office:
Although no additional documents are usually needed, applicants should have all necessary identification and residency proofs available. This is a good method for people who may or may not need help or have questions about their eligibility.
The Tax Residency Certificate (TRC) gives many benefits to individuals as well as businesses in Saudi Arabia. It is very important to give tax exemptions and simplify the tax procedures, it is very important to ensure compliance and maximize financial benefits. The following are the main advantages of getting a TRC.
TRC can help individuals and businesses to reduce or eliminate tax liabilities under Saudi tax laws and international agreements. TRC holders in Saudi Arabia are not taxed twice on the same income due to the fact that it has double taxation treaties (DTTs) with several countries. The income tax provision of the treaty may even allow some individuals to be fully exempt from income tax in Saudi Arabia. This is particularly beneficial to expatriates and multinational companies that operate in different countries.
Tax Residency Certificate helps in filing of tax for the individuals as well as the businesses having income sources from all over the world. Officially verifying the tax residency of the TRC ensures which of the tax regulations apply and which tax obligations must be fulfilled. It also enables taxpayers to supply necessary documentation to foreign tax authorities when claiming tax exemptions or deductions. This greatly reduces administrative burdens and reduces the risk of dispute with tax agencies in various jurisdictions.
When applying for some financial services, residency related permits or government benefits in Saudi Arabia, a TRC may be required. Proof of tax residency status may be required before certain transactions are approved by some banks, investment firms and government agencies, or tax related incentives are provided. Furthermore, the TRC can be used by people involved in cross border business activities to prove their tax status and avoid legal complications due to the lack of tax status.
Obtaining a Tax Residency Certificate in KSA is mandatory for any individuals or businesses that want to comply with the Saudi tax laws and take advantage of the double taxation treaties. A TRC is beneficial to expatriates working in Saudi Arabia or any company that is involved in international transactions as it clarifies your tax obligations, saves you from paying unnecessary taxes, and simplifies the tax filing process. As the E-invoicing in Saudi Arabia and digital services of ZATCA are available with the convenience, applying for a Tax Residency Certificate has never been easier.
As Saudi businesses and individuals maintain digital transformation momentum in Riyadh and elsewhere in Saudi Arabia, tax documentation must remain proper. Not only does it help in efficient managing of taxes but also gives you access to financial and governmental benefits in KSA with the help of a Tax Residency Certificate in KSA. The TRC can be used by taxpayers to ensure compliance, optimize their tax position and engage in cross border activities with tax relief under international agreements.
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