The United Arab Emirates has implemented tax reforms in recent years to boost revenue and align with global standards. 

This began with the introduction of value-added tax in 2018, economic substance rules in 2019, country-by-country reporting regulations in 2019, and most recently, the UAE introduced a federal corporate tax with a standard statutory rate of 9% from June 1.

Now, the UAE’s Federal Tax Authority  (FTA) has issued a guide for non-resident individuals and businesses that earn income in the country to help them determine whether they are liable for corporate tax. In a press release issued today, the FTA invited all non-resident Persons concerned, who derive income in the UAE, or those who conduct business or part of their business in the UAE to consult the new guidelines and refer to the Corporate Tax Law and relevant implementing decisions as well as any other guides published on the FTA website.

The guide provides a more straightforward explanation of the criteria for identifying non-residents liable for corporate tax.

It also outlines the situations that require non-residents to register for corporate tax purposes, how to calculate taxable income, and the additional obligations that non-residents must comply with under the Corporate Tax Law.

The FTA guide clarifies non-residents are liable for corporate tax in these specific cases:

A non-resident person is subject to corporate tax in the UAE if they have a permanent establishment with a turnover of more than $272,300 in a calendar year.

Non-resident legal entities are subject to corporate tax in the UAE if they have a permanent establishment, receive state-sourced income, have a nexus, or generate revenue from immovable property.

Non-resident entities that derive only state-sourced income and have neither a permanent establishment in the UAE nor a nexus in the country do not need to register for corporate tax.