Determination of Non-Resident person Nexus in the State

Determination of Non-Resident person Nexus in the State


  • With regards to Article 14 – Permanent Establishment of the Federal Decree Law No. 47 on Corporate Tax read along with Ministerial Decision No. 83 of 2023 guides us to determine the nexus of Non-Resident person in the state.

When shall a Non-Resident Person be said to have a Nexus in the State?

To determine the nexus of the non-resident person in the UAE the principles in the Organization for Economic Cooperation and Development (OECD) convention on income and capital can be taken into consideration:

  • A Non-Resident person has a Permanent Establishment in the state in any of the following instances: When it has a fixed or permanent place in UAE, habitually exercises or have the authority to conduct business in the UAE, Have nexus in any other form in the state.

  • A fixed or a permanent place in the UAE may be a branch, office, factory, workshop etc.

  • A fixed or permanent place in the UAE will not be considered as a PE of Non-Resident if it is solely used for storing or displaying goods, keeping stock of goods to be processed by third person, conducting preparatory or auxiliary nature activities.

  • If the same Non-Resident Person or its related party carries on a Business or Business Activity which is overall resulting from the combination of the activities carried out by the Non-Resident and its related party at same or different places and is not of a preparatory or an auxiliary nature and together would form a cohesive business operation had the activities not been fragmented. In such case the above-mentioned situations if occurred will not cease the place to be considered as a Permanent Establishment.

  • In absence of a fixed or a permanent Place in the UAE and a person has and habitually exercises an authority to conduct a business or business activity in the state on behalf of the Non Resident and the person regularly negotiates or concludes the contract on behalf of the Non Resident without the need for the material modification by the Non Resident Person than will not cease the status of Permanent Establishment in the UAE for the Non Resident Person.

  • The above situation will not be considered to consider the Permanent Establishment of Non-Resident in the UAE if the person is acting as an independent agent for Non-Resident Person in normal course of business or business activity and not exclusively on behalf of a particular Non-Resident.

  • Presence of Natural Person in the UAE does not create the PR for Non-Resident because such presence is consequence of temporary and exception situation.

Who is Natural Person

A “Natural person” means an individual or individuals. Individuals can earn income through employment, investments, or engaging in commercial, industrial, or professional activities either personally, as partners in a partnership, or as sole proprietors of a business.

  • An exceptional circumstance of public nature may include Act of war or terrorist attack, occurrence of natural disaster, imposing legal sanctions to leave the state, and other such circumstances as prescribed by the authority.

  • Exceptional circumstances of a private nature include occurrence of emergency health condition affecting the natural persons or their relatives or other such circumstances as prescribed by the authority.

NR Doshi & Partners is a leading financial services provider in the UAE with 36 years of experience. If you are Looking for an authentic firm to help you with corporate tax, look no further than us. Please contact our corporate tax expert on +971 50 6591233 or

There are no comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Start typing to search

Shopping Cart
Translate »