UAE Consular Legalization: TP Documentation Instead of “Hunting for Certificates” from Non-Residents

In practice, Ukrainian taxpayers frequently face tax risks resulting from transactions with non-residents whose legal forms are included in the List approved by Cabinet of Ministers of Ukraine (CMU) Resolution No. 480. Let’s examine this using the example of operations conducted with residents of the United Arab Emirates (UAE).

The table below presents the legal forms of UAE residents included in the CMU List No. 480. Transactions with these entities may be recognized as controlled or fall under the 30% tax adjustment requirement.

CMU List No. 480: Legal Forms of UAE Residents

For the 2025 reporting year, transactions with the aforementioned non-residents may be recognized as non-controlled, provided that taxpayers submit a Certificate confirming that the non-resident is a resident of a country with which Ukraine has concluded a relevant international treaty (sub-paragraph 39.2.1.2 of the TCU).

Paragraphs 103.5–103.6 of the TCU establish the requirements for the form of the Certificate and the procedure for confirming residency, which grants controlling authorities the right to verify the validity of applying the international treaty.

According to the position of the State Tax Service (STS), the Certificate may be issued either during the reporting year or after its conclusion, provided it explicitly states that the counterparty was a tax resident of the respective jurisdiction during that reporting year.

Furthermore, in Individual Tax Consultations (ITCs), the STS insists that to avoid the 30% adjustment of the financial result (under sub-paragraphs 140.5.4 and 140.5.5-1 of the TCU) regarding goods, works, or services purchased from or sold to non-residents from List No. 480, a Certificate of Payment of Corporate Income Tax by the non-resident must be provided. This document must strictly comply with the legalization requirements under Ukrainian law (paras. 103.5–103.6 of the TCU).

The Position of the Tax Authority

Within practical scenarios and in providing ITCs, the State Tax Service maintains that a Certificate confirming a non-resident’s residency in a treaty country is not identical to a document confirming the payment of corporate income tax by that non-resident. Consequently, a residency certificate alone cannot be used to exempt a taxpayer from the obligation to increase the financial result by 30% under sub-paragraphs 140.5.4 and 140.5.5-1 of the TCU.

Convention Between Ukraine and the UAE

The Government of Ukraine and the Government of the United Arab Emirates have concluded a Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital (hereinafter — the Convention). The Convention has been ratified by Ukraine and is an integral part of its national legislation. However, the Convention does not regulate procedural matters regarding the confirmation of the actual payment of corporate tax in the state of residency.

On one hand, the Convention is active and ratified; on the other hand, avoiding the 30% adjustments under sub-paragraphs 140.5.4 and 140.5.5-1 of the Tax Code of Ukraine (TCU) is associated with substantial tax risks in practice.

The UAE Tax System: Structural Features

Until 2023, the UAE was positioned as a jurisdiction with zero corporate taxation, where taxes were applied selectively (primarily to banks and the oil and gas sector).

By Federal Decree-Law No. 47 of 2022, the UAE introduced a Corporate Tax, applicable to financial years starting on or after June 1, 2023. The standard corporate tax rate is 9% (with certain exceptions).

Companies registered in Free Zones apply a 0% rate, provided they earn “qualified income” from activities within the Free Zones and meet specific requirements as a Qualifying Free Zone Person. These requirements include:

• Maintaining adequate economic substance;

• The specific nature of the income;

• Compliance with tax and transfer pricing (TP) rules.

Otherwise, the general tax regime with a 9% rate is applied.

Certificates from UAE Non-residents and Their Legalization

TP Documentation as a Risk Management Tool

Tax Risks for the Ukrainian Taxpayer

In practice, attempting to confirm the right to apply the Convention solely through a UAE residency certificate is accompanied by the following risks:

• Rejection of certificates by the controlling authorities due to formal or structural discrepancies.
• Forced adjustment of the financial result by 30%.
• Assessment of additional corporate income tax liabilities and the imposition of significant financial penalties.

Transfer Pricing Documentation: A Proactive Solution

Transfer Pricing documentation, prepared in accordance with Article 39 of the TCU and OECD approaches, allows you to substantiate the economic substance of transactions, the level of profitability, and compliance with the “Arm’s Length” principle.

Ready to prepare your Transfer Pricing documentation?Audit Invest will help: screening of operations with non-residents, CO reports, and a full package of transfer pricing documentation.

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