UAE Corporate Tax Law: When does a non-resident juridical person have a UAE Nexus?

Middle East


The UAE enacted its Corporate Tax Law (the “CTL”) in December 2022 (Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses). The CTL came into force on 1 June 2023. The main corporate tax rate of 9% applies on income exceeding AED 375,000 (roughly USD 102,000). The CLT provides that the rate of corporate tax which applies to “Qualifying Free Zone Persons” is 0% with respect to qualifying income and 9% on non-qualifying revenue.

Under Article 11 of the CTL, a taxable person includes a non-resident person which has a UAE nexus.

Cabinet Decision No. 56 of 2023 (Determination of a Non-Resident Person’s Nexus in the State) clarifies when a non-resident person will be treated as having a UAE nexus under the CTL.

Nexus in the UAE

A juridical person (such as a corporate entity) would be treated as non-resident in the UAE if:

  • incorporated or otherwise established; and
  • managed and controlled,

outside the UAE.

Any non-resident juridical person would be treated as having an UAE nexus if it earns income from any “immovable property” located in the UAE (“Immovable Property”).

Immovable Property is defined as:

  • any area of land over which rights or interests or services can be created;
  • any building, structure or engineering work attached to the land permanently or attached to the seabed; and
  • any fixture or equipment which makes up a permanent part of the land or is permanently attached to the building, structure or engineering work or attached to the seabed.

Income Attributable to Immovable Property

Taxable income attributable includes “income derived from the right in rem, sale, disposal, assignment, direct use, letting, including subletting and any other form of exploitation” of Immovable Property located in the UAE.

Requirement to Register

A non-resident juridical person with an UAE nexus is required to register with the Federal Tax Authority (the “FTA”) and obtain a Tax Registration Number .

Anti-Avoidance Provisions

The Cabinet Decision provides that artificial transfers or disposals of interests in Immovable Property which are not for “valid commercial or other non-fiscal reason which reflects economic reality” would be considered an arrangement to obtain a CTL advantage under the general anti-abuse rule. This could lead to a determination by the FTA resulting in an adjustment to the taxable person’s CTL liability.


The Cabinet Decision reflects the position under Article 6 of the OECD Model Tax Convention (2017). It means that UAE domestic tax law is in line with international tax principles.

It is worth flagging that under the CTL, when calculating taxable income, expenditure is generally tax deductible provided that it is not of a capital nature and is incurred wholly and exclusively for the purposes of the taxable person’s “business”. Deductions in respect of certain categories of expenses are disallowed or restricted to ensure that relief can only be obtained for expenses incurred for the purpose of generating taxable income and to mitigate instances of abuse.

In practice, this Cabinet Decision may only have a limited impact given that Immovable Property in the UAE can now only be acquired by UAE incorporated or otherwise established juridical persons.