UAE Clarifies VAT Fixed Establishment Criteria for Foreign Businesses Deploying Staff

The UAE Federal Tax Authority issued Public Clarification VATP046 addressing amendments under Federal Decree-Law No. 16 of 2024 and Federal Decree-Law No. 16 of 2025. DLA Piper reported that foreign entities may be considered to have a UAE Fixed Establishment without owning property if employees regularly operate from a client site. This standard affects local VAT registration, the reverse charge mechanism, and VAT refund eligibility.

Published October 31, 2026 Source: DLA Piper

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Issuing authority: Federal Tax Authority
Jurisdiction: United Arab Emirates
Stage: Final rule
Official document: Public Clarification VATP046
Official source: www.dlapiper.com

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According to an alert by DLA Piper, the UAE Federal Tax Authority (FTA) has released Public Clarification VATP046, which addresses legislative changes introduced under Federal Decree-Law No. 16 of 2024 and Federal Decree-Law No. 16 of 2025.

The FTA clarified that a foreign company can be treated as possessing a Fixed Establishment in the UAE even without owning physical premises in the country. Such an establishment may arise when foreign personnel regularly work from a client's premises within the UAE using company-provided equipment, including laptops and mobile phones.

DLA Piper noted that this interpretation sets a wider operational threshold for VAT compliance than standard permanent establishment rules applied under corporate tax frameworks. Consequently, foreign service providers deploying personnel to the UAE are advised to assess their operational status, as this determination impacts local VAT registration, the applicability of the reverse charge mechanism, and refund eligibility.