United Arab Emirates

For the purposes of UAE CT Law, a taxable person shall be either a resident person or a non-resident person.

Juridical persons that are incorporated or otherwise formed or recognised under the laws of the United Arab Emirates (both in mainland and Free Zones) are considered UAE resident persons.

Foreign juridical persons may also be treated as resident persons for UAE CT purposes where they are effectively managed and controlled (POEM) in the United Arab Emirates.

Natural persons who conduct business or business activity in the United Arab Emirates are also viewed as taxable resident persons for UAE CT purposes.

A non-resident person is a person who is not considered a resident person as above and either:

• has a permanent establishment (PE) in the United Arab Emirates
• derives state-sourced income, or 
• has nexus in the United Arab Emirates by way of earning income from immovable property in the United Arab Emirates.

Permanent establishment (PE)

The definition of a PE is aligned with the definition in the OECD Model Tax Convention. 

A non-resident person would generally be considered to have a PE in the United Arab Emirates where:

• it has a fixed or permanent place in the United Arab Emirates through which the business of the non-resident person, or any part thereof, is conducted
• where a person has and habitually exercises an authority to conduct a business or business activity in the United Arab Emirates on behalf of the non-resident person (this means either the person habitually concludes contracts in the name of the non-resident person or the person habitually negotiates contracts that are concluded by the non-resident person without the need for material modification by the non-resident person), or
• the non-resident person has any other form of nexus in the United Arab Emirates as might be specified through a Cabinet Decision.

A fixed or permanent place in the United Arab Emirates should not be considered a PE if it is used solely for conducting activities of a preparatory or auxiliary nature.

The mere presence of a natural person in the United Arab Emirates should not create a PE for a non-resident person in the following instances:

• Such a presence is a consequence of a temporary and exceptional situation.
• The natural person is employed by the non-resident person and its activities in the United Arab Emirates are not part of the core income-generating activities of the non-resident person or its related parties.

The UAE CT Law further provides an investment manager exemption, which allows a UAE-based investment manager (i.e. a person who provides brokerage or investment management services subject to regulatory oversight in the United Arab Emirates) to be considered an independent agent when acting on behalf of a non-resident person and thus not create a PE in the United Arab Emirates for a foreign investor. This is applicable to investment managers who deal in transactions involving, amongst others, commodities, real property, bonds, shares, derivative, securities, or foreign currency.