In recent years, the United Arab Emirates (UAE) has solidified its position as a global economic powerhouse, drawing businesses from around the world looking to establish a presence in the region. For international companies setting up permanent establishments (PEs) in the UAE, understanding the tax implications is crucial to ensure compliance with the country’s regulatory standards. In this blog, we explore the impact of corporate tax on businesses with a PE in the UAE, highlighting key aspects and implications.
Understanding "Permanent Establishment" in the UAE

A permanent establishment (PE) is a legal concept requiring foreign companies to obtain corporate tax registration. A PE is established when a non-resident company conducts business activities through a fixed place of business within the UAE. This includes offices, warehouses, factories, and construction sites active for over six months.
Installations and structures for natural resource exploration, such as mines, oil or gas wells, quarries, and extraction sites formed by non-resident entities, also qualify as PEs. Income earned by such establishments is subject to corporate tax.
According to the CT Law, the term “permanent establishment” excludes:
– Facilities used solely for storage, display, or delivery of merchandise.
– Facilities for maintaining merchandise for processing by another enterprise.
– Facilities for purchasing goods or collecting information for the enterprise.
– Facilities for undertaking supportive or secondary activities for the enterprise.
Provisions of the CT Law for Permanent Establishment in the UAE of Foreign Companies
The UAE’s corporate tax law includes vital provisions regarding Permanent Establishments (PE) for foreign companies:
– A foreign person or non-resident entity is deemed to have a PE in the UAE if it owns at least one permanent or fixed location for operating its business.
– A resident person with the authority to operate a business on behalf of a foreign non-resident individual constitutes a PE.
– Ownership of any partnerships or connections specified in other Cabinet Decisions, not just in Federal Decree-Law No. 47, also qualifies as a PE.
Foreign entities with a PE in the UAE are subject to the country’s corporate tax law. These corporations must comprehend their tax liabilities to avoid non-compliance.
In essence, foreign entities with permanent establishments aimed at earning income through business operations fall under the UAE Corporate Tax regime. They must identify their CT liabilities in advance to ensure compliance.
Calculation of Corporate Tax for Foreign Companies in the UAE
Under the UAE’s corporate tax regime, foreign companies with a Permanent Establishment (PE) will be subject to a 9% corporate tax rate on annual taxable income exceeding AED 375,000, which is attributable to UAE business operations. This includes activities such as service provision, goods production or sale, and property rentals. Non-resident entities must register for corporate tax and file tax returns within 120 days of the financial year’s end.
Accurate corporate tax calculation requires a careful assessment of net profits before tax, considering applicable deductions. Supported by proper documentation like invoices and receipts, these deductions can include donations, operational expenses, and tax credits, helping to reduce the overall corporate tax burden.
Navigating the complexities of corporate tax compliance in the UAE can be challenging for foreign businesses. Employing the services of top tax consultants such as Unicorn Global Solutions is essential. These experts have in-depth knowledge of local tax laws and regulations, providing invaluable guidance through the process of meeting tax obligations. With their assistance, businesses can successfully navigate the new tax landscape while leveraging the global opportunities that the UAE offers.
How Can Unicorn Global Solutions Help You?
For your foreign company in the UAE, Unicorn Global Solutions offers highly qualified tax consultants who assist at every step to ensure compliance with local tax policies and accurate identification of tax liabilities. Our team of experts goes beyond basic services, empowering you to thrive and enhance the efficiency of your operations. Access comprehensive accounting and tax consultancy services all in one place. Propel your business forward with our expert team at Unicorn Global Solutions. Contact us now to explore more. Text us on WhatsApp or call us today.