The Federal Tax Authority (FTA) in the UAE has provided clarity on the criteria for determining non-residents subject to corporate tax

The Federal Tax Authority (FTA) in the UAE has announced a new guide for the criteria for determining non-residents subject to corporate tax in the country.

This clarification comes as part of the corporate tax law, which came into effect on June 1, 2023.

In a statement, the FTA invited all non-residents who derive income in the UAE to consult the new guidelines and the relevant legal framework on their official website.
 

For non-resident natural persons

According to the FTA’s guide, a non-resident may be subject to corporate tax under specific conditions.

For natural persons, two cases apply. The first is if a natural person has a Permanent Establishment in the UAE and a Turnover exceeding AED1,000,000 during a calendar year. The second is if they derive State-Sourced Income from the Emirates.

For non-resident juridical persons (corporations)

Non-resident juridical persons (corporations) must meet specific criteria to be subject to Corporate Tax.
 

These include 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 also specifies the need for non-resident juridical persons to register for Corporate Tax purposes and obtain a Tax Registration Number (TRN) when they meet the relevant criteria. This is crucial to avoid compliance delays and possible administrative penalties.

Moreover, the FTA clarified that Corporate Tax registration is not required for Non-Resident juridical persons who solely derive State-Sourced Income and do not have a Permanent Establishment or nexus in the Emirates.

Additionally, the guide outlines that a Non-Resident natural person is required to register for Corporate Tax purposes and obtain a TRN if their Turnover attributable to their Permanent Establishment in the UAE exceeds AED1,000,000 within a calendar year.