Expected changes for residence certificates

On 18 May 2017, the draft amendments to Cabinet Regulation No.178 "Procedures for Application of Tax Relief Determined in International Agreements for Prevention of Double Taxation and Tax Evasion" ("Regulation No.178") have been announced in the State Secretaries' meeting.

The Regulation No.178 currently state that the tax from non-resident expenses may not be withhold or a reduced tax rate can be applied as per the Tax Conventions only if a payer has the payee’s resident certificate (tax relief certificate template) approved by the State Revenue Service (SRS) or another document on the payee's residence status issued by the competent authorities in the respective country until the date the corporate income tax declaration for the reporting period shall be submitted.

The said amendments provide that if the competent authority of the recipient country has not approved respective residence certificate template set in the Regulation No.178 but issued their own form, it shall be submitted to the SRS for approval along with the residence certificate’s template of Regulation’s No.178. It should be noted that the same harmonization procedure with the SRS currently should be performed for the residence certificates issued by other state’s competent authorities despite the fact that it is not described in the Regulation.