Indian Staff Working in Dubai: Six Months Under UAE Law, Nine Under the Treaty

Indian companies often test the UAE before they incorporate there: a team flies in to deliver a project for a UAE client, works from a rented apartment or the client's site, and flies home. Whether that creates a UAE permanent establishment — and therefore a Corporate Tax registration — depends on two tests that give different answers for the same months.

The UAE test: about six months

Under Article 14 of the Corporate Tax Law, a Non-Resident Person has a permanent establishment where it has a fixed or permanent place in the UAE through which its business is conducted. The FTA's Non-Resident Persons guide (CTGNRP1) says that an aggregate period of more than 6 months — even if not continuous — within the relevant 12 consecutive months will typically indicate permanence. It treats offices broadly: a representative office, a hotel room, a hotel business centre or a home office can all qualify, on the facts.

The treaty test: more than nine months

Article 5 of the India–UAE agreement contains two explicit nine-month thresholds. Paragraph 2(h) covers a building site or construction or assembly project, or supervisory activities in connection with it, "but only where such site, project or activity continues for a period of more than 9 months." Paragraph 2(i) is the one that matters for most service businesses:

Read the condition closely. The count is per project — the same project or connected projects — not per company. Periods aggregate, so breaks do not reset it. And the twelve-month window is any twelve-month period, not a calendar or financial year.

Which test wins

Article 66 of the Corporate Tax Law gives an international agreement in force priority over inconsistent provisions of the Law. CTGNRP1 applies that to permanent establishments specifically: the Law has to be read with the relevant double taxation agreement to decide whether a permanent establishment exists, and to the extent the agreement is inconsistent, the agreement prevails.

The guide works through the exact case. In its Example 9, a company resident in "Country I" sends employees to the UAE for a consultancy contract, working from a hotel apartment it rents for 8 months. Under the Corporate Tax Law, that is a fixed place permanent establishment. Under the treaty with Country I, which sets a 9-month threshold for services rendered through employees, there is no permanent establishment — and, absent any other UAE operations or revenue, the company does not need to register for Corporate Tax or file.

What the nine months does not cover

The nine-month rule answers one question — services furnished through personnel. It does not switch off the rest of Article 5.

• A place of management, a branch or an office in the UAE through which the Indian company's business is carried on is listed in Article 5(2) on its own terms.
• An agent in the UAE who has, and habitually exercises, an authority to conclude contracts on the company's behalf creates a permanent establishment under Article 5(4), unless the activities are limited to purchasing goods.
• An agent whose activities are devoted wholly or almost wholly to the company is not an agent of independent status under Article 5(5), so the independent-agent exclusion is not available.
• Facilities used solely for storage, display or delivery, or a fixed place used solely for purchasing or collecting information or for other preparatory or auxiliary activity, are excluded under Article 5(3).

One difference from domestic law is worth noting. The UAE agency test in Article 14 also reaches a person who habitually negotiates contracts that the non-resident then concludes without material modification. The treaty's Article 5(4) is framed around the authority to conclude contracts. Where the treaty applies and is narrower, it is the treaty test that governs.

The treaty has to be available to you

The nine-month threshold protects an enterprise of India — a company that is resident in India under Article 4(1)(a), being liable to tax in India by reason of domicile, residence, place of management or a similar criterion. Article 29 separately denies treaty benefits to an entity created mainly to obtain them or lacking bona fide business activities. An operating Indian company delivering a real project meets both on its facts.

Once the project runs past nine months in a twelve-month window, the treaty and domestic law point the same way: a permanent establishment exists, and the next question is how much profit is attributable to it.

What to check

1. Keep a day count per project for every employee and contractor working in the UAE.
2. Decide which engagements are connected projects and count them together.
3. Test against any rolling twelve-month window, not the calendar year.
4. Do not rely on the nine months if the UAE presence is also a place of management, branch or office of the business.
5. Check whether anyone in the UAE habitually concludes contracts for the Indian company.
6. Confirm the Indian company is a resident of India under the treaty and can show bona fide business activity.
7. Plan the UAE entity before the nine-month mark if the work is going to continue.
8. Remember the same Article 5 applies in reverse to Dubai staff working in India — that side is a question of Indian law.

CTGNRP1 is guidance rather than legislation; the operative provisions are Article 14 of the Corporate Tax Law and Article 5 of the agreement.