Due to the increasingly complex laws of most countries in relation to taxation of companies and individuals, the time when it was possible to use the simplest solutions is almost coming to an end.
Previously, for resolving issues of corporate tax planning, an ordinary offshore company abroad was sufficient in most of the cases. A private account in a foreign bank was, in its turn, a simple solution to optimize taxation of individuals. However, today such solutions are far from perfect.
Those, who want to properly approach the issue of tax optimization, need to use only those solutions that comply best with the applicable international law and with today's realities. One of the solutions is registration of the company, eligible for obtaining a tax residency certificate.
Before considering the possibility of obtaining a tax residency certificate, let us consider what this certificate is and why is it necessary at all.
The definition of a tax residency certificate
A certificate of tax residency / domicile is a legal document certifying the tax residency of a legal entity or a natural person in a given country.
To obtain such a certificate for a legal person / company, such company must meet the necessary requirements ― to be appropriately registered in the country, to have an office, to provide in some form a confirmation of its business activities and to meet the other conditions (exact requirements depend on the country of incorporation).
To obtain the tax residency certificate, a natural person must possess a right to reside permanently in the country – residence permit, and proof of residence in the country for a certain period of time in a year.
Why a tax residency certificate is necessary
A tax residency certificate proves residency of a company / a legal entity in the country that issued the document. In addition, upon availability of the double taxation treaties, this certificate entitles you to enjoy the benefits of these agreements. Certificate of residency / domicile can be obtained both by a company and by a natural person.
How to get the certificate and by whom it is issued
To obtain a tax residency certificate one must prepare documents according to the requirements list and fill out the necessary forms. Further, all documents along with the form are submitted to the state authority, issuing such certificates. For example, in the case of the UAE, the issuance of certificates is carried out by the Ministry of Finance.
The issuance of certificate on the example of the UAE and comparison with other countries
The United Arab Emirates is, in fact, the unique country in terms of taxation. Almost in all other countries, where you or your company become a tax resident, it automatically results in tax deductions in the domicile country. But the UAE is an exception to the rule. Your company may be fully resident and obtain a tax residency certificate, and at the same time to be completely exempted from taxation. The same applies to natural persons – tax residents of Dubai.
Contact us on all the questions on how to obtain a tax residency certificate. Our consultants will respond to your questions in the shortest possible time.
