Determination of the Conditions under which the Presence of a Natural Person in the State Would not Create a Permanent Establishment for a Non-Resident Person

Ministerial Decision No. 83 of 2023: Determination of the Conditions under which the Presence of a Natural Person in the State Would not Create a Permanent Establishment for a Non-Resident Person

Ministerial Decision No. 83 of 2023 defines the conditions under which the temporary presence of a natural person in a state can be considered an outcome of exceptional circumstances. These conditions play a crucial role in determining the tax implications for non-resident individuals. By understanding and fulfilling these criteria, individuals can ensure their presence in a state does not lead to unintended tax obligations. In this article, we will explore the conditions that must be met for a temporary and exceptional presence in the context of public and private circumstances.

Article (2) Conditions of a Temporary and Exceptional Presence in the State

1. For the purpose of paragraph (a) of Clause 7 of Article 14 of the Corporate Tax Law, the presence of a natural person in the State shall be considered a consequence of a temporary and exceptional situation where all of the following conditions are met:

1. The presence of the natural person in the State is a consequence of exceptional circumstances of a public or private nature.
2. The natural person or the Nonresident   Person cannot reasonably predict the exceptional circumstances.
3. The natural person did not express any intention to remain in the State when the exceptional circumstances ended.
4. The Non-Resident Person does not have a Permanent Establishment in the State before the occurrence of the exceptional circumstances.
5. The Non-Resident Person did not consider that the natural person is creating a Permanent Establishment or deriving income in the State as per the tax legislation applicable in other jurisdictions.

1. For Clause 1 of this Article, an exceptional circumstance is a situation or an event beyond the natural person's control that occurred while he was already in the State, which he could not reasonably predict or prevent, and which prevented him from leaving the State as initially planned, including but not limited to any of the following circumstances:

1. With respect to the exceptional circumstances of a public nature:

1. Adoption of public health measures by the competent authorities in the State, the jurisdiction of the original workplace, or the World Health Organization.
2.  Imposition of travel restrictions by the competent authorities in the State or the jurisdiction of the original workplace.
3. Imposition of legal sanctions on the natural person preventing them from leaving the State’s Territory.
4. Acts of war or occurrence of terrorist attacks.
5. Occurrence of natural disasters or force majeure beyond reasonable control.
6. Any other circumstances similar to those provided in this paragraph as the Authority prescribes.

1. With respect to the exceptional circumstances of a private nature:

1. Occurrence of an emergency health condition affecting the natural person or their relatives up to the fourth degree, including by way of adoption or guardianship.
2. Any other circumstances similar to those provided in this paragraph as the Authority prescribes.

The conditions for a temporary and exceptional presence in a state provide a framework for individuals and non-resident natural personsto navigate the tax implications associated with unforeseen circumstances. By meeting these conditions, individuals can ensure that their temporary stay in a state does not result in unintended tax liabilities. Understanding the requirements outlined in the Corporate Tax Law is crucial to avoid any disputes or potential non-compliance issues. As circumstances evolve, it is advisable to consult with tax professionals or authorities to stay informed about any updates or additional circumstances that may qualify under the temporary presence provision.