Corporate Tax


Decision No. 83 of 2023 on the Determination of the Conditions under which the Presence of a Natural Person in
the State would not Create a Permanent Establishment for a Non-Resident Person

This is another important Ministerial Decision no 83 of 2023 on situations not constituting a Permanent Establishment of a Non-
Resident Person in UAE.

Broadly speaking, there are 3 types of PE (Article 14) under the UAE CT law which are as follows:
i. Fixed place PE (fixed place from which business of NR is carried out)
ii. Agency PE (person habitually exercising contacts in UAE on behalf of NR)
iii. Nexus PE (yetto be prescribed)

Interestingly, the Federal Decree Law provided an exception to the effect that presence of an individual (natural person) in UAE will not constitute a Fixed Place PE of Non-Resident Person if:

1) The presence is temporary/ exceptional.

2) Where person is an employee of NR, a) activities performed are non-income generating and b) no State Sourced Income is earned by the NR. This Ministerial Decision deals with the first exclusion of Temporary and Exceptional Presence in UAE which prescribes conditions to be adhered:

a) There must be exceptional circumstances (one which occurred while in UAE which is beyond individual’s control delaying the exit
from UAE) of a public nature (health measures/ travel restrictions prescribed, legal sanctions, war/ attacks, natural disasters, etc)
or private nature (emergency health conditions including of relatives up to fourth degree of kinship).

b) There should not be any intention to remain in UAE when the exceptional circumstances end.

c) The Non-Resident Person did not have a PE in UAE before such exceptional circumstances.

d) The Non-Resident Person did not consider the occurrence of the exceptional circumstances as constituting a PE as per the tax
legislation applicable in other jurisdictions.
While the concept of an individual forming a PE of a NR is more relevant in terms of Service PE, the UAE CT law seems to have
embedded the concept of Service PE under Fixed Place PE itself. It would also be relevant to analyze the relevant provisions of tax
treaty entered into between UAE and NR’s jurisdiction.
The Ministerial Decision provides clarity on an important aspect and would be relevant for NRs to determine whether they constitute
PE in UAE. Where a PE is constituted, the NR would be a Taxable Person and the income attributable to the PE would be
subject to tax in UAE.

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