Essential Takeaways from the Inaugural Tax Period Under UAE Corporate Tax Law
In our previous blog, we explored the concept of the first tax period for resident juridical person subject to Corporate Tax Law in the UAE. Now, let’s delve deeper into the specific case of non- resident persons having a permanent establishment (PE) in UAE & a resident person by virtue of being effectively managed and controlled in the UAE.
A non-resident Person who is a juridical person who has a Permanent Establishment.
- In the case of a Non-Resident Person having a Permanent Establishment in UAE and its activities which constituted a Permanent Establishment existed at 1 June 2023, the first Tax Period will be its first 12-month Financial Year commencing on or after 1 June 2023.
- If the Permanent establishment of Non-resident is created on or after 1 June 2023, the First Tax Period will be the period from when it began operations until its first-year end as per its Financial Statements. The first Tax Period of such Person cannot be less than 6 months or more than 18 months.
- If the Permanent Establishment exists by virtue of a fixed place of Business in the UAE, then for Corporate Tax purposes, such Permanent Establishment would only be treated as having come into existence once it has been operational for six months (considered as existing on 1st Dec, but w.e.f 1st June) from the start of Corporate Tax, subject to the provisions of any applicable Double Taxation Agreement.
- If the Permanent Establishment exists by virtue of a Person habitually exercising an authority to conduct Business or Business Activity on behalf of the Non-Resident Person (dependent agent situation), then the Permanent Establishment is considered to exist on 1 June 2023 (i.e. because it was operational when Corporate Tax was implemented).
First Tax period in the case of business having PE in existence in UAE prior to 1 June 2023 is illustrated in the below table:
| Scenario | Financial Year followed | First Tax Period | Subsequent Tax Period | First Tax Return Due date |
| A Non-Resident Person has had a fixed place of Business in the UAE through which it has operated since 1 February 2022 and it continues to operate for the foreseeable future. The fixed place of Business was operating in the UAE at 1 June 2023.
On 1 December 2023, the Non-Resident Person’s fixed place of Business establishes a degree of permanence so a Permanent Establishment exists |
1 Feb – 31 Jan | 1 Feb 2024 – 31 Jan 2025 | 1 Feb 2025 – 31 Jan 2026 | 31-Oct-25 |
| A Non-Resident Person has had a Person habitually exercising an authority to conduct business or Business Activity on behalf of the Non Resident Person since 1 March 2021. On 1 June 2023, this constitutes a Permanent Establishment for the Non-Resident Person. |
1Mar – 28 Feb | 1 Mar 24 to 28 Feb 2025 | 1 Mar 2025 – 28 Feb 2026 | 30-Nov-25 |
First Tax period in the case of business having PE in existence in UAE on or after 1 June 2023 is illustrated in the below table:
| Scenario | Financial Year followed | First financial Year | In months | First Tax Period | Subsequent Tax Period | First Tax Return Due date |
| Non Resident person has a Permanent Establishment from 1 June 2023 | 1 Sept – 31 Aug | 1 Sept 2023 -31 Aug 2024 | 12 months | 1 Sept 2023 to 31 Aug 2024 | 1 Sept 2024 – 31 Aug 2025 | 31-May-25 |
| On 1 August 2024, a Non-Resident Person creates a branch (a fixed place of Business) in the UAE through which it operates and continues to operate for the foreseeable future. After 6 months (1 February 2025), the Permanent Establishment exists. |
Calendar year | 1 Aug 2024 – 31 Dec 2025 | 17 months | 1 Aug 2024 – 31 Dec 2025 | 1 Jan 2026 – 31 Dec 2026 | 30-Sep-26 |
| On 5 May 2024, a Non-Resident Person is considered to have a Permanent Establishment by virtue of a Person habitually exercising an authority to conduct Business or Business Activity on behalf of the Non-Resident Person. | 1 May – 30 Apr | 5-May 2024 to 30 Apr 2025 | 11 months 27 days | 5-May 2024 to 30 April 2025 | 1 May 2025 – 30 Apr 2026 | 31-Jan-26 |
Resident Person that is incorporated in a foreign jurisdiction that is effectively managed and controlled in the UAE.
In the case of Resident Person by virtue of being effectively managed and controlled in the UAE, the first tax period would be Financial Year or part thereof, commencing on or after 1 June 2023.
First Tax period in the case of Resident Person that is incorporated in a foreign jurisdiction that is effectively managed and controlled in the UAE on or after 1st June 2023 is illustrated in the below table:
| Scenario | Financial Year followed | First Tax Period | Subsequent Tax Period | First Tax Return Due date |
| A company incorporated in a country other than the UAE has a Financial Year of 1 January to 31 December, a 12-month period. With reference to all facts and circumstances, the company determined that, for the period 1 January 2024 to 31 December 2024, it was effectively managed and controlled in the UAE, and is therefore a Resident Person. |
Calendar Year | 1 Jan 2024 – 31 Dec 2024 | 1 Jan 2025-31 Dec 2025 | 30-Sep-25 |
| A company was incorporated in a country other than the UAE on 1 September 2023, with a Financial Year of 1 September to 31 August, a 12-month period |
1 Sept – 31 Aug | 1 Sept 2023 – 31 Aug 2024 | 1 Sept 2024 – 31 Aug 2025 | 31-May-25 |
The specific details and requirements of the first tax period may vary depending on the latest updates to the UAE Corporate Tax Law. It is essential to consult with relevant authorities or tax professionals for the most accurate and up-to-date information. Feel free to reach out to us for any assistance at nikhil@bclglobiz.com.
Also read: UAE Corporate Tax Result on Business Growth
