Definition

A Foreign Permanent Establishment (PE) refers to a branch or fixed place of business that a UAE company maintains abroad. UAE Corporate Tax allows businesses to claim an exemption to avoid double taxation on profits earned through foreign PEs.

Key points

• Exemption must be elected in the Corporate Tax Return.
• Requires maintaining proper documentation of foreign taxes paid.
• Prevents the same income being taxed in both UAE and the foreign country.

Practical example

A UAE engineering firm has a branch in Saudi Arabia. Profits earned in Saudi can be exempt from UAE Corporate Tax if the exemption election is made.

Why it matters

Helps international UAE companies remain competitive and avoid double taxation.