Under the value-added tax, we often encounter the terms “place of business”, “fixed place of business” and “place of residence”. In various regulations, you will see these terms used individually or in combination with each other. Let us understand the difference between these terms.

Set up a VAT business location in the UAE

The establishment location refers to the place where a company is legally established in a certain country/region or where major management decisions are made and central management functions are performed.

For example: Jehan Electronics LLC was established in Dubai. The Dubai office is its headquarters and the central management function of the office. Therefore, Jehan Electronics LLC is established at its Dubai office in the UAE.

Permanent establishment in the UAE

A fixed place of business is a fixed place of business other than the place of business, in which the person can regularly or permanently engage in his business, and if sufficient human and technical resources are available, the person can provide or obtain Goods or services.

For example: Jehan Electronics LLC has opened offices in Abu Dhabi, UAE and Riyadh, Saudi Arabia. Both offices are branches of electronic product trading. Therefore, Jehan Electronics LLC has fixed offices in the UAE and Saudi Arabia.

Therefore, the branches of enterprises are called fixed institutions, in which they conduct business regularly and retain sufficient human and technical resources to conduct business.

UAE Residence

Residence is a term used to indicate the place where a person owns a business office or a fixed business office. Therefore, the residence of an enterprise includes its business office and fixed business office. For registration under VAT, consumables manufactured in the place of residence should be counted to check whether they exceed the mandatory registration threshold. To learn more about registration via VAT, please refer to our VAT registration in the UAE article.

For example: From the above example, it is clear that Jehan Electronics LLC has a residence in the UAE (due to its establishment in Dubai) and Saudi Arabia (a fixed establishment in Riyadh).

Therefore, although the terms “place of residence”, “fixed residence” and “place of residence” are usually used interchangeably, they actually have different meanings. These are especially important when registering with VAT.

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