A Permanent Establishment defines when a non-resident company’s operations in the UAE achieve sufficient substance to warrant taxation on earnings.
Key Factors:
- Maintaining a fixed place of business through which commercial activities are conducted wholly or partly.
- Enjoying use of installations, machinery, tools, or the like.
Example:
The authorities deemed an overseas engineering firm’smaintenance of two leased offices and a sizable site crew for a lengthy offshore project as constituting a taxable PE under Emirati laws.
Taxation Implications:
Satisfying PE criteria results in corporate income taxes being assessedon all profits attributable to UAE activities, thereby incentivizing carefully structured business models emphasizing substance over form for optimal tax efficiency.