Breaking News: UAE announces New Tax Rules for Non Residents

The UAE’s Federal Tax Authority (FTA) has offered clarification on the standards used to identify non-residents who are subject to corporate tax.

New Tax Rules for Non Residents

The UAE’s Federal Tax Authority (FTA) has revealed a fresh set of guidelines outlining the parameters for identifying non-residents liable to corporate tax within the nation.

This announcement is a component of the corporate tax legislation that became operational on June 1, 2023.

In an official statement, the FTA encourages all individuals not residing in the country but earning income in the UAE to refer to the recently released guidelines and the applicable legal framework on the FTA’s official website.

For non-resident individuals, the FTA’s guide outlines specific conditions under which they may be subject to corporate tax.

For natural persons, two scenarios are applicable. The first is if an individual has a Permanent Establishment in the UAE with a turnover exceeding AED 1,000,000 in a calendar year. The second is if they earn State-Sourced Income from the Emirates.

Regarding non-resident juridical persons (corporations), they must fulfill certain criteria to fall under the scope of Corporate Tax. This includes having a Permanent Establishment in the UAE, deriving State-Sourced Income, or having a nexus in the UAE, such as earning income from Immovable Property in the country.

The guide emphasizes the necessity for non-resident juridical persons to register for Corporate Tax and obtain a Tax Registration Number (TRN) when meeting the relevant criteria. This is crucial to prevent compliance delays and potential administrative penalties.

Furthermore, the FTA clarified that Corporate Tax registration is not obligatory for non-resident juridical persons solely earning State-Sourced Income without a Permanent Establishment or nexus in the Emirates.

Additionally, the guide specifies that a non-resident natural person must register for Corporate Tax and obtain a TRN if their turnover attributable to their Permanent Establishment in the UAE exceeds AED 1,000,000 within a calendar year.

The information provided herein is for the general information of the user and is provided in good faith. We make no representation or provide warranty of any kind, express or implied, regarding the adequacy, suitability, validity, or completeness of the information. Our advice in regard to UAE corporate tax and value added tax is based on our understanding of the relevant laws and the regulations issued. We cannot be held responsible for new regulations and/or interpretation of existing regulations by the FTA that is not consistent with our advice. Under no circumstance shall we have any liability to any user of this information or to third parties for any loss or damage of any kind incurred as a result of the use or reliance of this information.