UAE publishes Ministerial Decision No. 83 of 2023 on the Determination of the Conditions under which the Presence of a Natural Person in the State would not Create a Permanent Establishment for a Non-Resident Person for the Purposes of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses
The Decision was published on 10 April 2023 and is in effect from 25 April 2023.
Conditions of a Temporary and Exceptional Presence in the State
The Decision provides that the presence of a natural person in the UAE shall be considered a consequence of a temporary and exceptional situation where all of the following conditions are met:
- The presence of the natural person in the UAE is a consequence of exceptional circumstances of a public or private nature;
- The exceptional circumstances cannot reasonably be predicted by the natural person or the Non-Resident Person;
- The natural person did not express any intention to remain in the State when the exceptional circumstances end;
- The Non-Resident Person does not have a Permanent Establishment (PE) in the UAE before the occurrence of the exceptional circumstances; and
- The Non-Resident Person did not consider that the natural person is creating a PE or deriving income in the UAE as per the tax legislation applicable in other jurisdictions.
The Decision further provides that an ‘exceptional circumstance’ is a situation or an event which are;
- Beyond a natural person’s control;
- Which occurred while he was already in the UAE;
- Which he could not reasonably predict or prevent; and
- Which prevented him from leaving the UAE as originally planned.
(a) Examples of exceptional circumstances of a public nature include, but are not limited by, the following exceptional circumstances of a public nature:
- Adoption of public health measures by competent authorities in the UAE or in the jurisdiction of the original workplace, or by the World Health Organisation (WHO);
- Imposition of travel restrictions by the competent authorities in the UAE or in the jurisdiction of the original workplace;
- Imposition of legal sanctions on the natural person preventing him from leaving the UAE’s territory;
- Acts of war or occurrence of terrorist attacks;
- Occurrence of natural disasters or force majeure beyond reasonable control; and
- Any other circumstances similar to those provided for above, as prescribed by the Federal Tax Authority (FTA).
(b) Example for exceptional circumstances of a private nature, include but are not limited by the following:
- Occurrence of an emergency health condition affecting the natural person or their relatives up to the fourth degree, including by way of adoption or guardianship; and
- Any other circumstances similar to the above as prescribed by the FTA.
Alia Noor (FCMA, CIMA, MBA, GCC VAT Comp Dip, Oxford fintech programme, COSO Framework)
Ahmad Alagbari Chartered Accountants