Even if there is no fixed place in the UAE, a foreign company can still have a PE through the activities of a so-called “dependent agent” in the UAE. The “dependent agent test” will be met when “business travellers or UAE-based persons act on behalf of the foreign company in the UAE and have, and habitually exercise, the authority to conclude contracts in the name of the foreign company without material intervention from the non-resident company.” Under model treaty language, to avoid being a dependent agent there are two conditions that must be satisfied: The agent must be both legally and economically independent of the enterprise. The agent must be acting in the ordinary course of its business in carrying out activities on behalf of the enterprise.
However, a PE will not trigger if a person carries on the foreign company’s business in the UAE in the normal course of their own business. Such an exception applies only if the independent agent does not work exclusively for the foreign company and is truly, legally and economically independent from the foreign company. Providers of corporate tax consulting services in Dubai can help you further with the dependent agent test.
