Definition

A Permanent Establishment (PE) is a fixed place of business that gives rise to a taxable presence in the UAE for a foreign company.

Key points

• Defined under UAE Corporate Tax Law and OECD standards.
• Includes offices, branches, factories, and construction sites (over a set duration).
• Can also arise from dependent agents who habitually conclude contracts in the UAE.
• A PE makes the foreign entity liable for UAE corporate tax.

Practical example

A German company opens a branch in Abu Dhabi. The branch is a permanent establishment, making the company subject to UAE corporate tax on UAE-sourced profits.

Why it matters

Understanding PE is vital for foreign investors and multinationals operating in the UAE.