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Non-resident: basis of taxation

Applies
FY2024 onwards
Reviewed
Rule
UAE-CT-NR-BASIS-2024.1
By

How are non-residents taxed under UAE Corporate Tax?

On income of a UAE permanent establishment and, for a company, UAE property income. Other UAE-sourced income falls under withholding tax instead.

Per Federal Decree-Law No. 47 of 2022, Article 12, Corporate Tax Base

A non-resident is brought into the UAE Corporate Tax charge on income attributable to a Permanent Establishment in the UAE and, for a juridical person, on income attributable to a nexus in the UAE arising from immovable property. State-sourced income not attributable to a Permanent Establishment is subject to withholding tax and does not by itself require Corporate Tax registration where it is the only UAE income.

The connecting factor determines what is within the charge — the income attributable to the Permanent Establishment or the nexus, not the non-resident's worldwide income. Where the only UAE income is State-sourced, the position is a withholding-tax one, not a Corporate Tax registration one.

How a non-resident is brought into charge

Within the Corporate Tax charge

  • Income attributable to a Permanent Establishment in the UAE — for a natural or a juridical person
  • For a juridical person, income attributable to a nexus in the UAE arising from immovable property

Withholding tax only

  • State-sourced income not attributable to a Permanent Establishment is subject to withholding tax
  • Where State-sourced income is the only UAE income, no Corporate Tax registration is required

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

    Permanent establishment

    Income attributable to a Permanent Establishment in the UAE is within the charge, for a natural or a juridical person. Whether a Permanent Establishment exists is its own test; this rule takes it as a determination.

  3. 3

    Nexus from immovable property

    For a juridical person, income attributable to a nexus in the UAE arising from immovable property is within the charge. Reached only for a juridical person.

  4. 4

    State-sourced income

    With no Permanent Establishment and no nexus, State-sourced income is subject to withholding tax at the published rate and does not by itself require Corporate Tax registration where it is the only UAE income. The rate is not stated here — it is the subject of its own rule.

  5. 5

    Connecting factors

    With none of the above, there is no UAE basis of taxation as computed.

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.

Branch office in the UAE

A foreign company operating through a branch office in Abu Dhabi.

Computed

Within the UAE charge as computed: income attributable to a Permanent Establishment in the UAE is brought into charge, based on the determination you supplied.

Decided by the permanent establishment

Foreign owner of UAE property

A foreign company that owns and lets an apartment building in Dubai but has no office or staff in the UAE.

Computed

Within the UAE charge as computed: income attributable to a nexus in the UAE arising from immovable property is brought into charge, based on the determination you supplied.

Decided by the nexus from immovable property

State-sourced income only

A foreign company whose only UAE income is interest paid by a UAE customer, with no presence or property in the UAE.

Computed

No basis for the Corporate Tax charge as computed: with no Permanent Establishment and no nexus from immovable property, the non-resident's State-sourced income is subject to withholding tax at the published rate and does not by itself require Corporate Tax registration where it is the only UAE income, based on the determinations you supplied.

Decided by the state-sourced income

No UAE connection

A foreign individual providing services remotely to a UAE client, with no presence, property or State-sourced income in the UAE.

Computed

No UAE basis of taxation as computed: the non-resident has no Permanent Establishment, no nexus from immovable property, and no State-sourced income, based on the determinations you supplied.

Decided by the connecting factors

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

3 inputs still need your determination:

  • Is the non-resident a juridical person? (Answer no for a natural person.)
  • Does the non-resident have a Permanent Establishment in the UAE?
  • Does the non-resident derive State-sourced income?

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