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Effectively managed and controlled in the UAE

Applies
FY2024 onwards
Reviewed
Rule
UAE-CT-EMC-2024.1
By

When is a foreign company UAE resident through management?

When its key management and commercial decisions are regularly and predominantly made in the UAE. A tax treaty settles residence claimed by two states.

Per Federal Decree-Law No. 47 of 2022, Article 11, Resident Person and Non-Resident Person

A juridical person incorporated abroad is effectively managed and controlled in the UAE — and so a Resident Person — where its key management and commercial decisions on strategic and policy matters are regularly and predominantly made in the UAE. Where the person is also resident in another country, which state has taxing residence is resolved under the applicable Double Taxation Agreement.

This is the second of the two routes to residence for a juridical person (the first is incorporation in the UAE). It is a facts-and-circumstances test, and the board indicators below corroborate it rather than decide it. A dual-residence conflict is resolved under a treaty, not by this domestic rule.

How the place of management is judged

The determinative question

Where are the key management and commercial decisions on strategic and policy matters regularly and predominantly made?

Indicators that point to the UAE

The FTA's example, for a subsidiary company:

  • The key management and strategic decisions are in substance made in the UAE
  • Board meetings are held in the UAE
  • All board members are resident in the UAE

Dual residence

  • Where the person is also resident in another country, the conflict is resolved under the applicable Double Taxation Agreement

Order of testing

  1. 1

    Inputs requiring your determination

    Any input a person must decide and has not decided stops the computation. An undecided input is never read as a no.

  2. 2

    Place of management and control

    The person is effectively managed and controlled in the UAE where its key management and commercial decisions on strategic and policy matters are regularly and predominantly made in the UAE. Board-meeting location and board residence corroborate this; they are not tested separately.

  3. 3

    Dual residence

    Where the person is managed and controlled in the UAE but is also resident in another country under that country's law, which state has taxing residence is resolved under the applicable Double Taxation Agreement, not by this rule.

Examples

Illustrative scenarios — ours, not the authority’s — each computed live by this rule. Change any fact and the outcome is the rule’s, not a hand-written answer.

Subsidiary run from the UAE

A company incorporated abroad whose board meets in Dubai, whose members are UAE-resident, and whose strategic decisions are in substance taken in the UAE — with no competing residence elsewhere.

Computed

Effectively managed and controlled in the UAE as computed: the key management and commercial decisions are regularly and predominantly made in the UAE, based on the determinations you supplied.

Decided by the place of management and control

Managed from abroad

A company incorporated abroad whose strategic and policy decisions are taken by a board that meets and resides outside the UAE.

Computed

Not effectively managed and controlled in the UAE as computed: the key management and commercial decisions are not regularly and predominantly made in the UAE, based on the determination you supplied.

Decided by the place of management and control

Dual residence

A company managed and controlled from the UAE that is also treated as resident in its country of incorporation under that country's law.

Computed

Managed and controlled in the UAE as computed, but the person is also resident in another country: which state has taxing residence is resolved under the applicable Double Taxation Agreement, not by this rule, based on the determinations you supplied.

Decided by the dual residence

Try it

Supply the facts and this rule computes the outcome in your browser, live. Leave a determination undecided and it blocks the result — it is never read as a no.

Not computed yet

1 input still need your determination:

  • Are the key management and commercial decisions on strategic and policy matters regularly and predominantly made in the UAE?

Computed in your browser from the figures you supply. Nothing is sent anywhere, and the result is a computation against a rule — reference, not tax advice.

Sources

Share this rule

Reference, not tax advice.

Pankaj Agarwal — Tax Technology Leader