When is a foreign company a tax resident in the UAE?

Example 11: Foreign company effectively managed and controlled in the UAE Company N is a limited company incorporated in Country N. However, in 2024, Company N was effectively managed and controlled in the UAE and, therefore, considered a Resident Person for Corporate Tax purposes. As a consequence, the worldwide income of Company N was subject to Corporate Tax. 5.1.3. Tax residency of foreign companies with UAE branches A UAE branch of a juridical person is an extension of its parent or head office and is not considered a separate legal entity in its own right. Therefore, a UAE branch of a foreign company (that is incorporated, and effectively managed and controlled, in a foreign jurisdiction) is not considered to be a Tax Resident Person. 41 Instead, the foreign company is considered to be a Non-Resident Person. If, however, the foreign company (that is incorporated in a foreign jurisdiction) is effectively managed and controlled in the UAE, the foreign company (along with its branches) is considered to be a Resident Person for the purposes of the Corporate Tax Law42 and, therefore, Tax Resident in the UAE.43 5.1.4. Tax residency of Exempt Persons The tax residency status of an Exempt Person is determined by reference to the type of Exempt Person in question. Exempt Persons include four categories of persons: Category 1: Automatically Exempt Persons This applies to Government Entities.44 The Business or Business Activity of this type of Exempt Person that is not its exempted activity is treated as an independent Business subject to Corporate Tax.45 A Government Entity, despite being an Exempt Person, is established in the UAE and, therefore, considered as a Tax Resident.46 Category 2: Exempt if they notify the Ministry of Finance, and meet the relevant conditions 41 Article 3(1) of Cabinet Decision No. 85 of 2022. 42 Article 11(3)(b) of the Corporate Tax Law. 43 Article 3(2) of Cabinet Decision No. 85 of 2022. 44 Articles 4(a) and 5(2) of the Corporate Tax Law. 45 Article 5(3) of the Corporate Tax Law. 46 Article 3(1) of Cabinet Decision No. 85 of 2022. Tax Procedures Guide | Tax Resident and Tax Residency Certificate | TPGTR1 33

Article 3 – Resident Person 1. For purposes of Article (40) of the Corporate Tax Law, a Parent Company and Subsidiary must be Resident Persons that are not considered resident for tax purposes in another country or foreign territory under a relevant international agreement in force in the State. 2. Where a member of a Tax Group becomes a resident for tax purposes in another country or foreign territory in accordance with Clause (1) of this Article, the relevant member shall be treated as leaving the Tax Group from the beginning of the Tax Period in which it became a resident for tax purposes in such other country or foreign territory. 3. A foreign juridical person that is considered a Resident Person under paragraph (b) of Clause (3) of Article (11) of the Corporate Tax Law or a juridical person that is incorporated or otherwise established or recognised under the applicable legislation of the State but that is effectively managed and controlled in another country or territory shall maintain documentation that supports the position that it is not resident for tax purposes in that other country or foreign territory as specified under Article (56) of the Corporate Tax Law. Ministerial Decision No. 125 of 2023 – As published by Ministry of Finance 2 4. The documentation to be maintained for the purposes of Clause (3) of this Article shall include either of the following: a. A confirmation issued by the relevant tax authority of that other country or foreign territory. b. A confirmation issued by the relevant competent authorities for the purposes of the application of the relevant international agreement in force in the State.