Adapted and expanded from Dr. Ahmad Helwani’s original LinkedIn publication. This website edition includes current technical updates and practical examples.

Review the operating facts before the tax conclusion

A UAE company may have an employee working from another country, a director spending extended periods abroad or a related company providing cross-border funding. These arrangements can raise different tax questions. A practical review starts by separating the people, activities, contracts and money flows, then identifying the rules that apply in each jurisdiction.

The OECD released its 2025 Model Tax Convention update in November 2025. It includes guidance on cross-border home working and changes relevant to the interpretation of financial transactions. It is a useful reason to review existing arrangements, rather than assume that the location recorded in an employment contract tells the whole story.

A home office does not automatically create a permanent establishment

The updated commentary assesses home working through the facts and circumstances, including the extent of use and the commercial reason for the employee’s presence in that country. Its discussion of working-time percentages is part of a specific fixed-place analysis; it is not a universal exemption from every permanent-establishment rule.

Keep a record of where the employee works, the duties performed, the commercial purpose of the arrangement and any authority to negotiate or conclude contracts. Also identify premises made available by the business and customer-facing activity. These facts give the adviser a basis for considering fixed-place and other possible tax connections under the relevant rules.

Use the applicable treaty and domestic law

The OECD Model and its commentary do not automatically rewrite a bilateral tax treaty. The actual agreement, its effective provisions and relevant domestic law need to be checked. The MoF treaty dashboard provides access to the UAE’s treaty documents; the existence of an agreement alone does not establish that every benefit or exemption is available in a particular case.

For example, an overseas work arrangement should have a short country file containing the applicable agreement, the relevant period, the employee’s role and the reason the business approved the arrangement. Where local advice is needed, send those facts together. This is usually more effective than asking whether remote working is generally allowed.

Keep loan pricing separate from deduction limits

For related-party financing, one question is whether the transaction and interest terms meet the arm’s-length principle. Another is whether the resulting interest expense is deductible under domestic tax rules. A supportable market rate does not, by itself, resolve a statutory deduction restriction.

The UAE has general and specific interest-deduction rules, alongside its transfer pricing requirements. A financing review should therefore retain the agreement, amount and currency, maturity, security, use of funds, borrower information and pricing support, then assess the relevant deduction rules separately. The OECD’s changes do not replace that UAE analysis.

Create an approval process for overseas working

Consider a Dubai business whose employee requests an extended stay abroad for personal reasons. Before approving it, management could document the proposed dates, duties, customer contact, decision-making authority and reporting arrangements. If the role later changes to developing that overseas market, the business should revisit the assessment. This illustration shows why a one-time approval should not become an indefinite tax conclusion.

A useful internal process gives HR a clear escalation point, gives finance access to relevant location data and requires a new review when the role or duration changes. Payroll, immigration and employment obligations may also need separate advice; a corporate-tax review should not be treated as clearance for every other requirement.

Keep a clear cross-border evidence file

Maintain consistent agreements, travel and working-location records, invoices, decision records and financing calculations. Where two jurisdictions tax the same income, the applicable treaty may provide a mutual agreement procedure; the MoF guidance explains how eligibility and the submission process are assessed. Relief is not automatic, so early review of the relevant facts and deadlines matters.

The practical objective is a documented, country-specific decision that can be revisited when the business changes. A short review completed before an arrangement begins is often easier to maintain than an explanation assembled after a tax enquiry.

Sources and further reading

Reviewed and expanded on 2 November 2026. Examples are illustrative. The treatment of a particular business depends on its facts and the rules applicable to the relevant period.