We already know that a free trade zone (FTZ) entity in UAE offers many business (and tax) possibilities.
A further possibility available to a FTZ is to issue residence permits and obtain tax residence certificates from the UAE authorities for its foreign owners and executives. A FTZ company, must have physical presence in the UAE and, in that respect, it must own or hire premises. If only a small office is required as the company will be used by its foreign owners mainly for residency purposes the most cost effective options are available by free zones in the northern emirates, notably Hamriyah and Ajman free zones. Physical presence options include “flexi desks” or “flexi offices”.
Furthermore, and if a local bank account is maintained with some movements, the foreign owners and executives can apply to the Ministry of Finance to receive UAE tax residence certificates.
A UAE residence permit and a tax residence certificate can be useful to many foreign owners and executives of FTZs who wish to register tax residency in the UAE. It is worth noting, that banking institutions in UAE and many outside consider UAE tax residence certificates as sufficient proof of tax residency in the UAE. As in all cases, the advice of a competent tax lawyer must be sought.
Obtaining a residence permit is the primary condition for being considered as resident in the UAE.
As a general rule, a foreign individual has to have a sponsor in order to apply for a residence permit in the jurisdiction. For many expatriates, the company that employs them will act as their sponsor and secure them residence visa. For those who do not come on an employment contract, there are two other ways for obtaining UAE residency:
• investment in real estate (property residence visa)
• set up of corporate structure to act as sponsor
Real estate investor/property residence visa UAE government in June 2011 introduced a new system extending the validity of the visa granted to real estate investors for up to 3 years. Under the property residence visa, holders reside freely in the UAE but are not allowed to work.
The preferred way to obtain residency is through a corporate structure. For foreigners, setting up a FTZ company is a practical way of obtaining sponsorship. As far as the company is concerned, it must have physical presence in the UAE. In that regard, the most interesting and cost effective options are proposed by free zones situated in the northern emirates with possibility to have“flexi desks” or “flexi offices”.
Requirements for a personal tax residence certificate from the Ministry of Finance of UAE:
• request letter from the individual
• passport copy and valid visa copy
• bank statement for the last 6 months
• certificate from the UAE company stating the individual activity and sources of income
• AED 1.000 (EUR 300, equivalent).