UAE VAT: Public Clarification on “Non-Resident” Status and Fixed Establishment in the UAE

UAE VAT: Public Clarification on “Non-Resident” Status and Fixed Establishment in the UAE

by | Sep 10, 2026

The Federal Tax Authority (“FTA”) has issued a VAT Public Clarification VATP046 on 4 September 2026 (‘the Clarification’) clarifying amendments made to the UAE VAT Decree Law vide Federal Decree Law No. 16 of 2024.

One of the key aspects clarified is change in the circumstances in which a Non-resident person is regarded as a resident in the UAE for VAT purposes. The key aspects of the said amendment are summarized as under:

Key Aspects Clarification
What is the Change and Clarification?
  • Under the amended definition of “Non-Resident”, a person will generally be regarded as a UAE resident where the person has a Place of Establishment or Fixed Establishment in the UAE, irrespective of whether the person owns or leases the premises from which the business is carried out
  • It has been specifically clarified by an illustration where the Foreign Business would not be regarded as a Non-Resident for VAT purposes:
    • A foreign Business’ employees regularly work from its client’s premises in the UAE. In such case, even though the foreign Business does not own the premises, the presence of the Business’ employees in the UAE, and the technology resources (e.g., mobile phone or computer) they use in the UAE, would create a Fixed Establishment
Why Does this Change Matters The distinction between a UAE resident and a Non-Resident can have significant VAT implications. The same may impact various tax positions, interalia:

  • Whether the business is required to register for UAE VAT
  • Whether supplies made by the business are treated as supplies by a UAE resident or a Non-Resident
  • The applicability of the reverse charge mechanism to services or goods
  • The VAT treatment of transactions between a foreign head office and its UAE operations or personnel
Key Transactions which may be Impacted The Clarification is potentially relevant to non-UAE incorporated businesses that:

  • Deploy employees or secondees to the UAE on a recurring or long-term basis
  • Have personnel working from the UAE customer premises
  • Provide services requiring employees to be physically present in the UAE typically in case of infrastructure projects
  • Operate UAE projects through personnel located at project or customer sites
  • Provide employees with company laptops, mobile phones, systems or other technical resources for use in the UAE
  • Use customer, group-company, co-working or other third-party premises to conduct business activities in the UAE
  • Have historically treated their UAE supplies as being made by a non-resident because they do not have a UAE office or branch

Key Actions Steps for Businesses

Business should undertake a targeted UAE VAT residency and Fixed Establishment review, entailing the following areas:

  • Identify all overseas employees, secondees, contractors and other personnel who perform activities in the UAE
  • Resources available to overseas personnel in the UAE like laptops, mobiles, etc.
  • Determine whether UAE-based personnel are involved in activities connected with the making or receiving of supplies by the foreign business
  • Reassess whether they have a UAE VAT registration obligation or whether their existing registration position needs to be updated
  • Review customer and supplier contracts, invoices and internal VAT procedures to ensure that the VAT treatment is consistent with the revised residency position.

Please Click here to download the VAT Public Clarification

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