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[World Tax News] UAE issues list when a natural person’s presence doesn’t result in a PE and more…

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Editorial Team – [2023] 150 taxmann.com 134 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. UAE lists down situations where the presence of a natural person won’t give rise to PE

The UAE Ministry of Finance (MoF) has issued Ministerial Decision No. 83 of 2023 outlining conditions under which the presence of a Natural Person inUAE wouldn’t give rise to a Permanent Establishment for the Non-Resident Person.

The presence of a natural person in UAE shall be considered a consequence of a temporary and exceptional situation if all of the conditions mentioned therein are met:

(a) The presence of the natural person in the State is a consequence of exceptional circumstances of a public or private nature.

(b) The exceptional circumstances cannot reasonably be predicted by the natural person or the Non-Resident Person.

(c) The natural person did not express any intention to remain in the State when the exceptional circumstances ended.

(d) The Non-Resident Person does not have a Permanent Establishment in the State before the occurrence of the exceptional circumstances.

(e) The Non-Resident Person did not consider that the natural person is creating a Permanent Establishment or deriving income in the State as per the tax legislation applicable in other jurisdictions.

The decision further explains what constitutes exceptional circumstances. It is provided that an exceptional circumstance is a situation or an event beyond the natural person’s control and:

(a) Which occurred while he was already in the State;

(b) Which he could not reasonably predict or prevent; and

(c) Which prevented him from leaving the State as originally planned, whether with respect to the exceptional circumstances of a public nature (act of war, occurrence of natural disasters etc.) or private nature (Occurrence of an emergency health condition etc.).

Source: Ministerial Decision No. 83 of 2023

2. Taxable person with revenue exceeding AED 50 million to maintain Audited Financial Statements for UAE corporate tax

The Ministry of Finance, UAE, published a Ministerial Decision No. 82 of 2023 determining the categories of taxable persons required to prepare and maintain Audited Financial Statements for the purposes of the Taxation of Corporations and Businesses.
The decision mandates a taxable person deriving revenue exceeding AED 50,000,000 (fifty million United Arab Emirates dirhams) during the relevant Tax Period. Further, a Qualifying Free Zone Person is also required to maintain audited financial statements regardless of their gross revenue or net profits.

3. Australia announces tax incentives to increase the supply of housing

The Australian Government has announced incentives to increase the supply of housing in the Country. The incentive includes:

(a) Reduced withholding tax

The withholding tax rate for eligible fund payments from managed investment trusts (MIT) attributable to residential build-to-rent projects is to be reduced from 30% to 15%.
This measure will apply from 1 July 2024 for income attributable to newly built build-to-rent projects. Foreign residents from an information exchange country are subject to a final MIT withholding tax rate of 30% for income attributable to a residential property, including build-to-rent projects.

(b) Increased depreciation rate

The capital works tax deduction depreciation rate for eligible new build-to-rent projects is to be increased from 2.5% to 4% per year.
This measure will apply to projects where construction commences after the Budget (9 May 2023) and will shorten the period that construction costs of eligible buildings are depreciated from 40 to 25 years.
Source: ATO.GOV.AU

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