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.
Exceptional Circumstance
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)
Associate Partner
Ahmad Alagbari Chartered Accountants