State Source Income

State Sourced Income, derived by a Non-Resident Person, that is not attributable to Permanent Establishment, may be subject to Withholding Tax; however, Withholding Tax is currently levied at the rate of 0%. This includes;

• Income derived from a Resident Person, i.e. income derived from a juridical person or natural person that is considered a Resident Person as per the Corporate Tax Law.
• Income derived by a Non-Resident Person from another Non-Resident Person to the extent it is attributable to a Business or Business Activity conducted by that other Non-Resident Person through a Permanent Establishment in the UAE.
• Income otherwise accrued in or derived from activities performed, assets located, capital invested, rights used, or services performed or benefitted from in the UAE.70 In other words, income may be considered to have a UAE source (State Sourced Income) for Corporate Tax purposes where the place of use, or performance of the activity, or the tangible or intangible assets generating the income, are located in the UAE.
• Income from movable or immovable property: Income arising from the use or sale of tangible property is sourced from the place where the property is located. For example, the sale of an apartment located in the UAE, or rental income earned from property located in the UAE (or from an interest in such property) would generally be considered State Sourced Income.
• Income from the disposal of shares or capital rights of a Resident Person: Capital gains and other income derived from the sale of shares or other rights in the capital of a juridical person is considered to be State Sourced Income where the juridical person is incorporated or resident in the UAE for Corporate Tax purposes.
• Income from intellectual or intangible property: Income received from the use, the right to use, or the granting of the permission to use in the UAE of patents, trademarks, trade brands, copyrights, artistic or scientific work, secret formula or process, goodwill and other such intangible or intellectual property in the UAE would generally be sourced from the UAE. This is irrespective of the location and residence for Corporate Tax purposes of the payor and recipient of the income.
• Interest income: Interest income is sourced from the UAE if it meets any of the following conditions:
• The loan is secured by movable or immovable property located in the UAE, i.e. Interest may be considered State Sourced Income where the collateral that secures the relevant loan or financing arrangement is located in the UAE; or
• The borrower is a Resident Person; or
• The borrower is a Government Entity.
• Insurance income: Insurance or reinsurance premiums are considered to be State Sourced income in any of the following instances:
• the insured asset is located in the UAE;
• the insured Person is a Resident Person; or
• the insured activity is conducted in the UAE