Host
There’s just so much more to hear. Download our podcast at DubaiEye1038.com.
Host
You’re listening to Drive Live. We have Ludmila Yamalova from Yamalova & Plewka in the studio. Drive Live Talks Legal. We are talking legal and want to hear from you. We’re here to answer your questions. Ludmila, you’re never usually stumped, are you?
لودميلا يامالوفا
Sorry, let me grab a microphone.
Host
Ah, there you go.
لودميلا يامالوفا
That’s all right, but please don’t jinx me.
Host
No, you always seem to handle things well. You’re great at saying, “This is what I know, this might be a new law…”
لودميلا يامالوفا
Let today be the day I make a mistake. Challenge accepted!
Host
Well, you’re more than capable of handling it. If you do have a question for Ludmila, text us at 4001, use the free app, or call us. Sometimes a call is easier for more complex issues: 04 871 5500.
Now, Ludmila, we had a query about tax residency last week that we didn’t get to address. It’s about tax residency certificates. Here’s the question:
“I’m a European national with a bank account in Switzerland, but I have a UAE residence visa. My bank in Switzerland recently requested a UAE tax residency certificate. How do I go about obtaining one?”
لودميلا يامالوفا
This is a certificate issued by the Ministry of Finance. It’s been available for several years, but the requirements have changed in the past year or two.
Previously, just having a UAE residence visa was sufficient to apply for the certificate. However, those requirements have become more stringent. It’s no longer enough to simply hold a UAE visa; you now need to demonstrate that you are a resident in practice.
The certificate is typically issued based on the UAE’s bilateral agreements with other countries to avoid double taxation. It is issued for specific countries, depending on the agreement.
To apply for the certificate, you must meet a range of requirements, which now include:
- Bank statements: You need at least six months of UAE bank statements to prove you have a financial presence in the country.
- Proof of residency: This used to mean a lease agreement, but now an Ejari registration is required, which includes utility registrations under your name.
- Immigration report: You must demonstrate that you have spent at least 180 days in the UAE during the relevant period.
- Salary certificate: If you are employed, you need a certificate from your employer. If you are a shareholder or self-employed, your trade license or share certificate will suffice.
Host
How does this apply to someone whose Ejari, for example, is in their spouse’s name?
لودميلا يامالوفا
That’s a common situation, and it’s manageable. You would need to demonstrate your link to your spouse, such as through a marriage certificate or by showing that your visa is under their sponsorship. That documentation will typically satisfy the authorities.
Host
What about self-employed individuals or freelancers who don’t have a salary certificate?
لودميلا يامالوفا
For self-employed individuals or business owners, you don’t need a salary certificate. Instead, you would provide your trade license or share certificate, which confirms your business ownership.
The Ministry of Finance wants to ensure you have financial ties to the UAE. That’s why the bank statement is critical—it shows your active relationship with the country’s economy.
Host
Thank you for clarifying that. We’ve received another text from Alan P. He asks:
“Where do I stand with regards to poor service and workmanship? I hired a maintenance company to complete work, but they’ve caused issues. The AC they installed doesn’t work, and the toilet units were installed incorrectly. Am I obligated to pay the remaining amount, or can I refuse payment based on the poor quality of work?”
لودميلا يامالوفا
This is a breach of contract issue. You contracted the company for specific services and agreed on a price based on their representations of the quality of work. If the company didn’t deliver on their part, they’ve breached the agreement.
Under UAE contract law—and this is consistent with many other jurisdictions—your obligation to pay is suspended if the other party breaches the contract first.
Here’s what you can do:
- Document the issues. Take photos, create a list of what was agreed upon versus what was delivered, and gather any relevant communication with the company.
- Withhold payment. If the breach is significant, you are not obligated to pay the remaining amount until they rectify the situation.
- Offset costs. If you choose to hire another company to fix the issues, you can deduct those costs from the original payment owed, provided the new work is comparable in scope.
Host
If the client decides to hire another company, can they claim reimbursement for additional costs incurred?
لودميلا يامالوفا
Yes, but it’s important to ensure the new contractor’s work is comparable to what was originally agreed upon. If the new contractor provides a significantly higher level of service or expands the scope of work, the original contractor could argue that the additional costs aren’t directly linked to their breach.
Additionally, if the original contractor’s poor work caused damage—such as the faulty AC installation leading to property damage—you may have a claim for those damages as well.
Host
That’s very insightful, Ludmila. We’ve got more questions lined up, so let’s take the next one.
Host
This one comes from a listener asking about employing freelance staff:
“We are looking at employing some freelance staff. What are the regulations regarding visa and contract requirements? For example, can we pay someone daily for the work they do? How should we issue contracts?”
لودميلا يامالوفا
This is a great question, as freelancing has become a much more viable option in the UAE. There are three main elements to consider: visa sponsorship, the freelance contract, and payment.
- Visa Sponsorship:
- In the past, freelancers needed to be on the sponsoring company’s visa. However, with recent changes, individuals can now work as freelancers even if they are sponsored by someone else, such as a spouse or another employer.
- Freelancers must still have a valid UAE residence visa. It’s not permissible to hire someone who only enters the UAE on a visit visa.
- Freelance Contract:
- You must formalize the relationship through a properly drafted freelance contract. This contract should outline the scope of work, payment terms, and the duration of the engagement.
- The contract must be registered with the relevant authority. For example, if you’re in a free zone, the contract may need to be registered with that free zone authority or with the Department of Economic Development (DED).
- Payment:
- Freelancers can be paid daily, weekly, monthly, or based on project milestones. The arrangement is flexible as long as both parties agree and it’s outlined in the contract.
- Just ensure you keep proper documentation of the payments, such as receipts or signed invoices, for compliance purposes.
Host
What about someone on a spouse’s visa that states “not allowed to work”? Would they need additional permissions to freelance?
لودميلا يامالوفا
Yes, they would need an NOC (No Objection Certificate) from their spouse, as the visa technically restricts work. However, this is a straightforward process. The NOC simply confirms that the sponsor—typically the husband in these cases—approves of the individual working.
For women on their husband’s sponsorship, this process has been in place for a long time and works well. However, the reverse is not true—if a husband is on his wife’s sponsorship, he cannot work without obtaining his own employment visa.
Host
That’s an interesting point. I also know of cases where people have convinced their spouses they cannot work because of that visa restriction.
لودميلا يامالوفا
Yes, I’ve encountered similar cases. The truth is, as long as the NOC and other contractual elements are in place, the person can work.
Host
Moving on to the next topic: this one is about unpaid invoices and company liquidation. The listener says:
“We’re a Dubai free zone company and had a six-month contract with another free zone company for services. The contract was signed and stamped. We received three late payments for the first three months, but the final three invoices remain unpaid. We recently found out that the client is closing their company and has already filed for liquidation.
The free zone told us they can’t help unless we provide a court order. We rely heavily on invoice payments and missed other opportunities to pursue this engagement. What steps should we take? What are the costs, and what’s the likelihood of resolution?”
لودميلا يامالوفا
This is a classic breach of contract case, specifically involving unpaid debts. Let’s break it down:
- Regulatory Authority’s Role:
- Free zone authorities do not adjudicate disputes. Their role is regulatory, not judicial, so they cannot compel the client to pay you.
- However, when a company files for liquidation, free zone authorities require clearance certificates, including proof that all outstanding debts have been settled.
- Next Steps:
- File a case with Dubai Courts to obtain a judgment for the unpaid invoices. Once you have a court order, you can present it to the free zone authority to freeze the liquidation process until the debt is resolved.
- You may also notify the company’s liquidators or auditors of your claim. While this doesn’t guarantee payment, it adds pressure on the company to settle.
- Costs:
- Court fees range from 5% to 7.5% of the claimed amount, capped at AED 40,000.
- If a court-appointed expert is needed, their fees typically range from AED 7,500 to AED 15,000. These costs can be recovered if you win the case.
- Representation:
- You don’t need a lawyer to file this type of case, but legal representation can make the process smoother, especially if you don’t speak Arabic or aren’t familiar with court procedures.
Host
What if the client has already liquidated and there are no assets left to recover?
لودميلا يامالوفا
Unfortunately, if the company’s assets have been exhausted, even a court judgment may not result in payment. That’s why it’s crucial to act quickly and file a claim before the liquidation process is finalized.
Host
Thank you, Ludmila. That was very thorough. Let’s take one last question.
Host
This one is about canceled real estate projects. The listener asks:
“How do authorities handle canceled projects, and how are refunds distributed? In light of recent news about Dubai Land Department seizures, what are the procedures for liquidating assets and compensating investors?”
لودميلا يامالوفا
When a real estate project is canceled, the process involves several steps and authorities:
- Project Review:
- The Dubai Land Department (DLD) reviews projects to assess viability. They consider factors like construction progress, financial health, and the developer’s ability to complete the project.
- If the project is deemed unviable, it is canceled and transferred to the Dubai Courts for liquidation.
- Liquidation Committees:
- Specialized committees oversee the liquidation process. This includes collecting funds from the project’s escrow account and selling off remaining assets, such as land or partially completed buildings.
- Investor Compensation:
- Once the project’s assets are liquidated, the proceeds are distributed among investors.
- Investors must submit claims with proof of payment to be eligible for compensation.
- Public Notices:
- The liquidation process includes publishing public notices in newspapers, allowing creditors to come forward.
- Dubai Court Website:
- The Dubai Courts website lists canceled projects and their status. Investors can track their project, upcoming hearings, and disbursement updates.
Host
That’s encouraging for investors. Do you have any final advice for those affected by canceled projects?
لودميلا يامالوفا
Yes, I encourage investors to stay proactive. Check the Dubai Courts website for updates and ensure you submit your claim on time. The process is administrative, so there’s no need for legal representation unless complications arise.
Host
Thank you, Ludmila. That’s all the time we have today.
لودميلا يامالوفا
Always a pleasure.
Host
Ludmila Yamalova from Yamalova & Plewka will be back next week for more legal insights. In the meantime, visit lylawyers.com for additional resources.
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