Does a branch of a foreign company need to register for Corporate Tax?

Article 11 – Taxable Person 1. Corporate Tax shall be imposed on a Taxable Person at the rates determined under this Decree-Law. 2. For the purposes of this Decree-Law, a Taxable Person shall be either a Resident Person or a Non-Resident Person. Federal Decree-Law No. 47 of 2022 and its amendments – Unofficial translation (as published by the Ministry of Finance) 16 3. A Resident Person is any of the following Persons: a. A juridical person that is incorporated or otherwise established or recognised under the applicable legislation of the State, including a Free Zone Person. b. A juridical person that is incorporated or otherwise established or recognised under the applicable legislation of a foreign jurisdiction that is effectively managed and controlled in the State. c. A natural person who conducts a Business or Business Activity in the State. d. Any other Person as may be determined in a decision issued by the Cabinet at the suggestion of the Minister. 4. A Non-Resident Person is a Person who is not considered a Resident Person under Clause 3 of this Article and that either: a. Has a Permanent Establishment in the State as under Article 14 of this Decree-Law. b. Derives State Sourced Income as under Article 13 of this Decree-Law. c. Has a nexus in the State as specified in a decision issued by the Cabinet at the suggestion of the Minister. 5. A branch in the State of a Person referred to in Clause 3 of this Article, shall be treated as one and the same Taxable Person. 6. The Cabinet shall, upon a suggestion of the Minister and in coordination with the relevant competent authorities, issue a decision specifying the categories of Business or Business Activity conducted by a resident or non-resident natural person that are subject to Corporate Tax under this Decree-Law.

established under the laws of the UAE, Company A is a Resident Person for Corporate Tax purposes. A UAE branch of a UAE juridical person is seen as an extension of its head office and, therefore, not considered a separate juridical person from its head office.10 Example 2: UAE branch of a juridical person incorporated in the UAE Company B is an LLC that is incorporated in the UAE. Company B has a head office in Dubai, but mainly operates from branches in Ajman, Sharjah, and Abu Dhabi. As a juridical person that is incorporated in the UAE, Company B is a Resident Person for Corporate Tax purposes. Although Company B has separate offices and premises for its branches across the UAE, these branches are all considered an extension of Company B’s head office. The head office and its branches are treated as one and the same, i.e. Company B and all of its UAE branches are considered as one juridical person that is a Resident Person. Similarly, a UAE branch of a foreign juridical person is an extension of its parent or head office and is not considered a separate legal entity from the parent or head office. A UAE branch of a foreign company cannot be considered a Resident Person in its own right. Instead, the foreign company with a UAE branch has a UAE Permanent Establishment, and is considered as a Non-Resident Person for Corporate Tax purposes.11 Example 3: UAE branch of a foreign company Company C is a company that is incorporated in Country C. It registers a branch in Al Ain, Abu Dhabi, for the purposes of facilitating loan arrangements for other companies in the same group. Company C has no other connection to the UAE and is not considered a Resident Person under the Corporate Tax Law because it is not effectively managed and controlled in the UAE. Instead, because of its Abu Dhabi branch and assuming that 10 Article 11(5) of the Corporate Tax Law. 11 Article 11(4)(a) of the Corporate Tax Law. Tax Procedures Guide | Tax Resident and Tax Residency Certificate | TPGTR1 14

Tax in the UAE. Branches of UAE companies A UAE branch of a Resident Person shall be treated as one and the same Taxable Person.42 In fact, a UAE branch of a domestic juridical person is regarded as an extension of its head office and, therefore, is not considered a separate juridical person. As a result, a branch of a UAE company will not be able to register for Corporate Tax individually. The head office must register for Corporate Tax on behalf of all of the UAE branches. This is also applicable for Free Zone branches of mainland UAE juridical persons and also for mainland branches of Free Zones Persons. Example 15: Branches of UAE companies Company F is a UAE incorporated logistics company that has a number of branches in the different Emirates of the UAE. Branches of UAE companies are regarded as an extension of their head office and, therefore, they may not register them separately. Therefore, Company F would register for Corporate Tax and be required to list all of the UAE branches it has on the Corporate Tax Registration application form. Resident juridical persons eligible for small business relief Small business relief will be available to businesses that meet the required conditions.43 Specifically, an eligible Taxable Person can claim small business relief if their Revenue is below or equal to AED 3,000,000 (three million dirhams) in the relevant Tax Period and all previous Tax Periods commencing 1 June 2023.44 Where the small business relief election is made, the business will be treated as having no Taxable Income during the relevant Tax Period. This means that they will have no Corporate Tax liability. However, meeting the conditions to elect for small business relief does not exempt that Taxable Person from meeting their Corporate Tax compliance obligations such as filing a Tax Return. Appropriate records need to be maintained to support the eligibility for the election being made. 42 Article 11(5) of the Corporate Tax Law. 43 Article 21(1) of the Corporate Tax Law. 44 Article 2(1) of Ministerial Decision No. 73 of 2023. Corporate Tax Guide I Registration of Resident Juridical Persons I CTGRJP1 27