Assistance to a leading Japanese Construction Company to assess UAE CT Impact

About the client

The client is a prominent Japanese construction company which has ongoing construction projects in Africa and operates in Dubai, UAE through a Representative Office engaged in supervision/ control of the project sites in Africa.

Problem statement/business context

• The employees of the Representative Office were engaged in supervising/ reporting for the project sites in Africa even though no construction activity was actually undertaken in UAE.
• With the introduction of Corporate Tax in UAE, the Client wanted to evaluate the potential CT implications that would arise to the Representative Office.

Solution

Conducted a thorough assessment of the roles and responsibility of each employee of the Representative Office and highlighted the potential Permanent Establishment exposure to the Client in UAE.

Timeline

6 weeks

Key geographies delivered

• United Arab Emirates
• Africa
• Japan

Outcome/benefits

• Suggested factors to mitigate the PE risk exposure by transferring certain employees of the Representative Office to the Project sites.
• Alternative suggestion to provide a compensation to the Representative Office at Arm’s length Price by the Head Office.