10 October 2026 · The Site Clock
The Construction Site PE
A building, construction, assembly or installation project is a permanent establishment trigger under Article 14 of Federal Decree-Law No. 47 of 2022. The catch is the clock: the number of months that actually creates a PE is usually fixed by the double-tax treaty between the UAE and the contractor's home country, commonly somewhere between 6 and 12 months. Supervisory work on the site counts toward the time. Check the specific treaty before you conclude either way.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
The project clock starts with the work and the treaty
Article 14 of Federal Decree-Law No. 47 of 2022 names a building site, construction project, assembly project or installation project as a PE route. The FTA's non-resident guide says the site or project can create a PE when it exists for more than six months in any 12-month period. Connected activities carried out at the site by related parties are included in that project review. The phrase connected activities matters when the same project is spread across entities.
The domestic rule is not the only document on the desk. If an applicable international agreement provides a longer duration for recognising a PE, the FTA says the agreement prevails. Read the treaty article beside the project scope, notice to proceed and time records. A project manager's estimate is not a substitute for the agreement that controls the cross-border result. Keep an English translation with the agreement used for the review.
Open the file before the site closes. A foreign contractor needs a chronology that shows mobilisation, physical work, installation, supervision, pauses, extensions and handover. The events below are not automatic conclusions. They are the records that let the adviser test when the project existed and what work the foreign business actually performed. A missing first record can move the apparent start date.
| Event | Record | Use |
|---|---|---|
| Mobilisation | Notice to proceed and access log | Identify the first activity to examine |
| Construction or installation | Site diary and progress certificate | Show work performed in the UAE |
| Supervision | Timesheets and inspection reports | Capture connected project activity |
| Handover or demobilisation | Completion certificate and final invoice | Support the end of the chronology |
Installation work can be the project
The statutory wording is wider than a finished building. It covers building, construction, assembly and installation. An engineering or equipment contractor whose UAE obligation is to assemble and commission a system therefore needs the same review as a civil contractor. Read the contract schedule, method statement and commissioning report together. The phrase supply only cannot settle a mixed supply-and-install arrangement. That includes commissioning work where it is part of the contracted delivery.
Supervisory activities connected with the project belong in the file. Keep supervisor timesheets, inspection reports, variation approvals and site records. The question is not whether every employee stayed in the UAE. It is whether the foreign business performed connected project work through the site and how that work fits the PE wording in the law or treaty. The record should identify the entity whose staff performed each task.
Separate UAE project work from remote design, procurement and head-office work in the ledger. Use subcontractor invoices, payroll allocation, project cost reports and approval records. Without that split, profit attribution becomes a debate about the contractor's total accounts rather than a calculation tied to the work that produced the UAE result.
Six months is not the only question
The FTA guide gives a domestic project test of more than six months in any 12-month period, while the FTA registration clarification says a longer duration in an applicable international agreement prevails. That makes the treaty a working document, not background reading. Download the relevant agreement from the Ministry of Finance and read its PE article with the project records.
The unsettled point is how every pause, extension and separate work package should be treated under a particular treaty. The official guidance confirms the domestic duration rule and treaty precedence, but it does not answer every project chronology. A project that appears safe under one agreement cannot be cleared under another because its site programme looks similar.
Record each interruption with its reason and evidence. A shutdown caused by a dispute is different from final demobilisation. A renewed work order is not automatically a new project. The contract history, access log and site diary should explain why the project period continued, stopped or needs a treaty-specific opinion.
Make one chronology before making the filing call
Ask for the signed main contract, every variation, the notice to proceed, access records, daily diaries, supervisor timesheets, progress certificates and completion file. Add the treaty selected for the contractor's residence. Those objects let the reviewer test duration, connected supervision, related-party work and the identity of the business performing the project. Ask for the records in one request so the chronology can be built once.
Build one chronology from those records. Place mobilisation, first work, pauses, extensions, parallel packages and handover on it. Tie every entry to an invoice, diary page, access record or certificate. Then identify the profit attributable to the UAE project in the ledger. A site conclusion without a profit file leaves the contractor knowing there may be a PE but not what must be reported.
If the site is active, address the issue at the next contract review rather than after handover. The decision is more useful while the project manager can retrieve the records and the commercial team can identify the scope that creates exposure. Treat the site clock as a tax control, not as a date to reconstruct from memory.
The project finding needs an attribution worksheet
A project PE does not make every foreign-company receipt UAE taxable by label. The FTA's non-resident guidance points to income attributable to a PE, so the contractor needs a working paper separating UAE project revenue, project costs, shared costs and profit attributable to the site. The treaty can affect the result, but it does not remove the need for a ledger tied to the work. Use the project code consistently across the revenue and cost records.
The FTA General Corporate Tax Guide uses taxable income of AED 6,000,000 for its rate example. AED 375,000 at 0% produces AED 0. AED 6,000,000 minus AED 375,000 leaves AED 5,625,000. Applying 9% to AED 5,625,000 gives AED 506,250. Replace the guide's input with the attributable project figure after the records have been tested.
The mistake we see most is waiting for the completion certificate before opening the PE file. The notice to proceed, access log and early invoices can establish the disputed part of the timeline. If the treaty result remains uncertain, record that uncertainty and obtain the exact agreement instead of importing a duration from another contractor's project.
Frequently Asked Questions
For foreign contractors and EPC firms working in the UAE.
When does a construction site become a UAE PE?
When the project runs past the duration threshold in the applicable double-tax treaty. Article 14 lists the site as a trigger, but the number of months that counts is usually set by the treaty between the UAE and the contractor's home country, commonly 6 to 12 months.
Is there a single domestic time limit?
The operative month threshold generally comes from the relevant tax treaty rather than a single domestic figure. That is why the same nine-month project can be a PE under one treaty and not under another. Always check the specific treaty.
Does supervision on site count toward the time?
Yes. Supervisory activities connected with the building or installation work generally count toward the duration threshold, not just the physical construction itself.
Can we split a contract to stay under the threshold?
Splitting a single project into shorter contracts rarely defeats the test. Related-party work on the same site can be aggregated, and tax authorities look at the project as a whole.
What tax applies once the site is a PE?
The profit attributable to the UAE project is taxed at 9% above AED 375,000, and the PE must register with the Federal Tax Authority and file a return. Treaty relief may still apply to how the profit is allocated.
Can Exiloz assess our site's PE risk?
Yes. We count the project duration against the relevant treaty threshold, factor in supervision and related-party work, and tell you whether the site creates a UAE PE.
Does your site create a PE?
Exiloz counts your project duration against the relevant treaty and flags PE and filing obligations.