The Federal Tax Authority (FTA) has announced that businesses must complete Corporate Tax registration within 90 days from the Date of Incorporation / MOA.
The UAE’s Corporate Tax Law now includes clear rules for both local (resident) businesses and foreign (non-resident) companies. If you are a global investor or an international business working with the UAE, knowing these FTA corporate tax rules for non-residents is extremely important.
In simple terms, a non-resident person becomes liable for UAE corporate tax services if they earn income from the UAE or have a significant connection known as a “nexus” with the country. This could be through activities such as operating a branch, managing projects, or having agents in the UAE.
By understanding these rules, non-resident businesses can plan better, avoid unexpected tax bills, and ensure they stay fully compliant with UAE laws. This not only builds trust with UAE authorities but also helps companies operate smoothly in one of the world’s most business-friendly environments.
Who is a Non-Resident Person?
The Federal Tax Authority (FTA) explains that a non-resident person is someone who is not officially considered a tax resident of the country. This could be:
- An individual or company that does not have a permanent office, branch, or fixed place of business in the UAE.
- A person or business that is not managed or controlled from within the UAE.
- Someone who earns income from UAE sources, such as selling goods, providing services, or receiving royalties, but operates mainly from outside the country.
- Any person or company that has a business connection (nexus) with the UAE without being physically established here.
When Do Non-Residents Need to Pay Corporate Tax in the UAE?
Non-resident businesses or individuals can become liable for UAE corporate tax in certain situations. This includes:
- Earning income from UAE sources – for example, renting out property in the UAE, offering consultancy services to UAE clients, or earning other locally generated income.
- Having a Permanent Establishment (PE) in the UAE – such as an office, branch, or other fixed place where business activities are carried out.
- Maintaining a strong business connection (nexus) – like owning property in the UAE or regularly doing business here.
If these conditions apply, corporate tax will be charged on taxable profits. The standard rate is 9% for profits above AED 375,000, while profits below this threshold are taxed at 0%.
Exemptions and Special Cases
Not every non-resident in the UAE has to pay corporate tax. You may be exempt if:
- You don’t earn any income from UAE sources.
- Your UAE income is already covered by UAE withholding tax.
- Your earnings come from specific foreign branch operations that qualify for relief.
The UAE has also signed many Double Taxation Agreements (DTAs) with other countries. These agreements are designed to prevent you from being taxed twice on the same income. Depending on the terms of the treaty between the UAE and your home country, your corporate tax liability may be reduced or even removed completely.
Compliance Requirements for Non-Residents
If you are a non-resident earning income or carrying out business activities in the UAE, you still have certain tax responsibilities under the new UAE Corporate Tax Law. These include:
- Registering for corporate tax with the Federal Tax Authority (FTA).
- Keeping accurate financial records for all UAE-related transactions.
- Filing corporate tax returns when required.
It’s very important to correctly identify your tax status especially to check whether you have a “nexus” (connection) or Permanent Establishment (PE) in the UAE. Even if you only operate occasionally in the country, you may still need to pay corporate tax if your activities meet the FTA’s criteria. Failing to comply can lead to penalties, legal issues, and reputational damage, so understanding these rules early is essential.
Conclusion
Understanding corporate tax rules for non-residents in the UAE is essential to avoid penalties and ensure compliance. Whether your UAE link is through real estate, services, or other income, knowing when a nexus applies helps you plan ahead. Partnering with experts like Reyson Badger ensures accurate classification, timely registration, and stress-free compliance so you can focus on your global business while staying fully aligned with FTA regulations.
