UAE's Federal Tax Authority issued guidance for Non-Resident Persons

The Federal Tax Authority has released a corporate tax (CT) guide to provide assistance to non-resident persons who derive income from the UAE. The guide helps in assessing whether such non-resident persons are subject to CT in the UAE.

The key aspects relating to definition, CT obligations and the income subject to CT for non-resident persons are set out below:

 Definition of a non-resident taxable person:

A non-resident taxable person is:

1. A natural person who is not a resident person but:

(a) Has a permanent establishment in the UAE and has a turnover attributable to his  Permanent establishment that exceeds AED 1 million within a Gregorian calendar Year; or

(b) derives UAE sourced income.

2. A juridical person that is incorporated or formed outside the UAE and is not effectively managed and controlled in the UAE to the extent it:

(a) has a permanent establishment in the UAE (i.e., a fixed place of business or other form of presence in the UAE); or

(b) derives UAE sourced income; or

(c) has a nexus in the UAE.

 Registration requirement for a non-resident person:

1. A non-resident person who is a natural person is required to register for CT purposes and

Obtain a tax registration number when the non-resident person has a turnover    attributable to his permanent establishment in the UAE that exceeds AED 1 million within a Gregorian calendar year. 

2. A non-resident juridical person is required to register for CT purposes and obtain a tax registration number when the non-resident person is subject to CT due to having:

(a) a permanent establishment in the UAE; or

(b) a nexus in the UAE.

Non-resident persons (both natural and juridical) that derive UAE sourced income and neither have a permanent establishment nor a nexus in the UAE are not required to register for CT purposes.

 Income of a non-resident person subject to CT in the UAE:

 1. The taxable income that is attributable to a non-resident person’s permanent     establishment or nexus in the UAE is subject to CT.

 2. CT is imposed on the taxable income of a non-resident person at the same rate as for a resident person, as follows:

          (a) 0% on the first AED 375,000 of taxable income; and

          (b) 9% on the amount that exceeds AED 375,000 of taxable income.

3. In the event that a non-resident person is a qualifying free zone person (e.g., a branch operating in a free zone), then CT will be imposed at the following rates:

         (a) 0% on qualifying income; and

         (b) 9% on taxable income that is not qualifying income.

4. Business activities of a non-resident natural person would be subject to CT only if the gross amount of turnover derived through conducting the business activities (e.g., through a permanent establishment) in the UAE exceeds AED 1 million during a Gregorian calendar year.

Source : FTA Website