UAE Corporate Tax: A Comprehensive Guide for Non-Residents as part of the new corporate tax law, which became effective on June 1, 2023.
The United Arab Emirates’ Federal Tax Authority (FTA) has introduced a comprehensive guide outlining the criteria for determining non-residents subject to corporate tax in the country.
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This announcement is part of the new corporate tax law, which became effective on June 1, 2023.
In an official statement, the FTA has encouraged all non-residents generating income in the UAE to refer to the new guidelines and the pertinent legal framework available on their official website for reference and compliance.
For non-resident natural persons, the FTA’s guide specifies the conditions under which they may be liable for corporate tax.
There are two applicable scenarios for natural persons.
Firstly, if a natural person maintains a Permanent Establishment in the UAE with a turnover exceeding AED 1,000,000 during a calendar year. Secondly, if they earn State-Sourced Income from the Emirates.
In the case of non-resident legal entities (corporations), specific criteria must be met for them to be subject to Corporate Tax. These criteria encompass having a Permanent Establishment in the UAE, deriving State-Sourced Income, or having a connection in the UAE, such as earning income from Immovable Property within the country.
The guide emphasizes the necessity for non-resident legal entities to register for Corporate Tax purposes and obtain a Tax Registration Number (TRN) upon meeting the relevant criteria.
This step is crucial to prevent compliance delays and potential administrative penalties.
Additionally, the FTA has clarified that Corporate Tax registration is not mandatory for non-resident legal entities solely earning State-Sourced Income without a Permanent Establishment or connection in the Emirates.
Furthermore, the guide outlines that a non-resident natural person must register for Corporate Tax purposes and obtain a TRN if their turnover attributable to their Permanent Establishment in the UAE exceeds AED 1,000,000 within a calendar year.
This ensures adherence to the new regulations and facilitates a smooth tax compliance process for non-residents in the UAE.
More info at FTA