Permanent Establishment Assessment
PE (Permanent Establishment) Assessment
From operational facts to remediation
Biz Easy helps companies with representative offices, branches, agents or seconded staff abroad determine whether their local activities create a permanent establishment (PE). We map the activities actually carried out on the ground, score each against the relevant PE tests, design practical remediation, and deliver an internal operating manual in English and Japanese. Our core coverage is the UAE and Saudi Arabia; for other Middle East and African jurisdictions, we work with local tax and legal specialists.
- Clients
- 200+Engagements across the Middle East and Africa
- Timeline
- c. 8 weeksFrom kick-off to final delivery
- Deliverables
- EN / JPThree deliverables in both languages
- Coverage
- UAE, KSA and beyondOther countries with local specialists
01 — Summary
The essentials of a PE assessment
In brief: Whether a permanent establishment exists depends not on the name or legal form of a presence, but on who does what in the country. The central question is whether the activities of an office, branch, agent or travelling employee remain preparatory or auxiliary, or form part of the core business.
The UAE introduced Corporate Tax for financial years starting on or after 1 June 2023. A non-resident with a PE in the UAE is taxable on the income attributable to that PE. Biz Easy breaks down each activity, documents the basis for the conclusion, and sets out the remediation and internal rules required, typically within around eight weeks.
02 — Typical situations
When companies come to us
A structured review of local activities is advisable in the following situations.
A representative office or branch is in place
A presence set up for market research or liaison has gradually taken on customer-facing sales or price negotiations.
Distributors or local partners are used
A local distributor or partner may be concluding contracts, or playing the principal role leading to their conclusion, on the company's behalf.
Engineers or staff are sent on assignment
Engineers from head office or affiliates are deployed for installation, maintenance or technical support for extended or repeated periods.
The structure is being reviewed for Corporate Tax
The company wants to be able to explain each entity's role and decision-making flow in writing for Corporate Tax filings, audits or head-office tax queries.
03 — Key issues
Principal issues in a PE determination
| Issue | What we examine |
|---|---|
| Fixed place of business (office, branch) | Whether an office or site is used over a sustained period, and whether the activities carried out there constitute the core business |
| Preparatory or auxiliary activities | Whether activities are limited to information gathering, advertising or storage, and whether the combination of activities remains auxiliary as a whole |
| Dependent agent PE | Whether local employees or distributors habitually conclude contracts, or habitually play the principal role leading to their conclusion |
| Service PE | The number of days and duration of services performed in the country, and whether the applicable tax treaty contains a service PE provision |
| Decision-making authority | Whether head office or the local presence decides sales plans, pricing and contract terms; the allocation of functions, assets and risks (FAR) |
| Cost bearing and cash flows | Who bears the costs of the presence and how charges between head office and the presence are settled |
The tests differ by domestic law and the applicable tax treaty, many of which are based on Article 5 of the OECD Model Tax Convention. In the UAE, we apply Federal Decree-Law No. 47 of 2022 on Corporate Tax and the guidance issued by the Federal Tax Authority (FTA).
04 — Our services
Our approach: four steps
Operational fact-finding
We confirm the activities carried out locally through interviews and internal documents, and map decision-making authority, involvement in contracts, influence on sales plans and cost flows.
- Interviews with head-office and local staff
- Review of policies, contracts and workflows
PE determination and scoring
We break the activities down and assess each against the fixed place, agency and service PE tests, classifying the exposure as high, medium or low using objective criteria.
- Activity-level conclusions with reasoning
- High / medium / low scoring
Impact analysis and remediation design
Based on the findings, we set out the tax implications and recommend changes to roles, contract structures and approval flows, together with an implementation roadmap.
- Remediation plan and roadmap
- Comparison with comparable cases
Reporting
We prepare the deliverables in English and Japanese and present the findings at a final meeting. On request, our qualified accountant briefs head-office stakeholders.
- Three deliverables (EN / JP)
- Final presentation
Post-assessment documentation (such as a PE position paper, role and authority matrix and process documentation) and engagement with tax authorities are proposed separately based on the findings. Formal legal opinions are outside our scope.
05 — Deliverables
Deliverables and outcomes
PE scoring assessment
Activity-level conclusions with a high / medium / low rating and the reasoning behind each.
Remediation report
Tax implications, recommended measures and roadmap, including comparison with comparable cases.
PE operating manual (internal)
Practical rules that let local staff judge what they may and may not do.
| Area | Before | After |
|---|---|---|
| Operations | Roles between head office and the local presence are unclear | Each activity is classified and its owner defined |
| PE determination | Relies on individual experience and judgement | Determined by scoring against defined criteria |
| Distributors and partners | No clear standard for what may be delegated | Procedures documented and criteria shared |
| Audits and authority queries | Supporting documents are not identified | Required documents and explanatory approach agreed |
06 — Timeline
Approach and timeline (around eight weeks)
| Period | Main activities | Milestone |
|---|---|---|
| Preparation | Scope alignment, sharing of existing documents, issue identification | Agreed scope and schedule |
| Weeks 1–3 | Kick-off, understanding of the business model, interviews with local presence and head office | Overview of activities |
| Weeks 3–5 | Activity-level determination and scoring | PE scoring assessment (deliverable 1) |
| Weeks 5–7 | Impact analysis, remediation design, roadmap | Draft remediation report and manual |
| Week 8 | Final presentation and delivery | Three deliverables (EN / JP) |
Timelines are indicative and depend on the number of locations, interviewees and whether local specialist input is required. Interviews are held on site within the UAE and online elsewhere.
07 — Countries
Jurisdictions covered
Our coverage extends beyond the UAE. Because domestic law, treaties and administrative practice differ by country, we confirm local positions with tax and legal specialists in each jurisdiction.
UAE
PE determination under the Corporate Tax Law and FTA guidance, for free zone and mainland entities, branches and representative offices.
Saudi Arabia
PE determination together with withholding tax, Zakat and Corporate Tax issues, reviewed with our Saudi accounting and tax team.
Other Middle East & Africa
PE, withholding tax, treaty access and local employment structures, addressed through interviews with and written confirmation from local specialists.
For local specialist input, we prepare the issues list and questionnaire, attend the interviews and consolidate the responses. Enquiries are made without disclosing the client's identity.
08 — Team
One team across tax and consulting
Accounting & Tax
Qualified accountants with hands-on Corporate Tax, VAT and FTA experience perform the technical analysis and sign off the tax conclusions.
Consulting
Our consultants run the interviews, map workflows, design remediation and manage the project, drawing on experience supporting Japanese companies across the Middle East and Africa.
Partner review
Kenichi Hokamura, our Founder and CEO and a qualified accountant, oversees quality review and escalations on every engagement.
09 — FAQ
Frequently asked questions on PE assessments
Which firms can support a PE assessment in the UAE in both English and Japanese?
Biz Easy, a consulting firm with offices in Dubai, Abu Dhabi and Tokyo, supports PE determinations and risk assessments for companies operating in the Middle East and Africa. Deliverables are prepared in English and Japanese so they can be used by both head office and the local team.
Can a representative office or branch constitute a PE?
The legal form alone does not decide the outcome. The determination depends on whether the local activities remain preparatory or auxiliary, such as information gathering, or extend to the core business, such as sales or contract negotiation. We set out the reasoning activity by activity.
Can travelling employees or seconded engineers create a PE?
Under some tax treaties, the number of days and duration of services performed in the country are relevant. We map the purpose, duration and content of each assignment and assess it against the rules of the relevant jurisdiction.
How long does an assessment take?
Under our standard approach, the assessment takes around eight weeks from kick-off to final delivery. The timeline depends on the number of locations and whether local specialist input is required.
Do you cover jurisdictions other than the UAE?
Yes. Our core coverage is the UAE and Saudi Arabia. For other Middle East and African jurisdictions, we work with local tax and legal specialists to address PE, withholding tax and treaty access.
Can you support documentation and authority engagement after the assessment?
Yes. Documentation such as a PE position paper, role and authority matrix and process documentation is proposed separately based on the findings.
How does a PE assessment relate to transfer pricing?
A PE assessment establishes whether a taxable presence exists in a country. Where a PE exists, the profit attributable to it is determined using transfer pricing principles. Transfer pricing documentation is covered by our International Tax Compliance service.
Contact
Start with a free review of your local activities
Tell us about your presence and the activities carried out locally. We will outline the PE issues to examine and how the assessment would run.