UAE Corporate Tax for Non Resident

Frequently Asked Questions

UAE CT is subject to foreign firms that function in the UAE through a permanent establishment or that are considered residents of the UAE for CT requirements. UAE-sourced income does not need the foreign entity to register and file for UAE CT.

Non-residents will be accountable to UAE CT if they have a permanent establishment in the UAE or receive revenue from the UAE (subject to 0% taxation). Income is typically deemed to be originated from the UAE:

  • If it is received from a UAE resident or a UAE Permanent Establishment, or
  • If it is derived from activities done or assets placed, money invested, and rights used in the UAE.

A foreign juridical person is subject to UAE resident for CT requirements when their income is sourced from the UAE and abroad if it is effectively managed and controlled in the UAE.

A foreign person who doesn’t operate a taxable business or engage in commercial activity in the UAE is often exempt from UAE CT. UAE-sourced income does not need the foreign firm to register and file for UAE CT.

  • A foreign person will typically have a Permanent Establishment in the UAE if one of the following conditions is met:
    • If it has a permanent place in the UAE through which the foreign person’s business functions.
    • If there is a person who has and regularly exercises the power to conduct business in the UAE on behalf of a foreign individual.
  • A fixed place of business is not regarded as a Permanent Establishment if it is simply used to store, show, or distribute products or commodities belonging to the foreign person, or to execute any preparatory or auxiliary operations.
  • On behalf of the foreign person acts as an independent agent, a Permanent Establishment would not arise if the person has and habitually has the authority to conduct business in the UAE. The application of an international agreement should be taken into account when determining whether a permanent establishment exists where it is relevant.
  • Foreign individuals who hold property in the UAE in their capacity are typically exempt from UAE CT and associated compliance procedures.
  • If the real estate represents a fixed place of business in the UAE through which the business of the foreign person is wholly or partially carried out, the investment in UAE real estate by a foreign juridical individual may give rise to a taxable permanent establishment.

Income shall be deemed to have been earned in the UAE if:

  • The revenue may originate from a UAE resident,
  • The income obtained is ascribed, to a Permanent Establishment in the UAE of a non-UAE resident; or
  • The income is obtained from operations performed, assets located, capital invested, or services performed or benefited from in the UAE.

The Corporate Tax Law presents a non-exhaustive list of revenue sources that are deemed to be in the UAE. In due time, a Cabinet Decision may be made outlining the categories of UAE-sourced income subject to withholding tax. The UAE has a 0% withholding tax rate.

Dividends, interest, capital gains, royalties, and other investment returns obtained by foreign juridical persons shall not be subject to UAE CT unless such revenue can be ascribed to the foreign person’s permanent settlement in the UAE.

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