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UAE Corporate Tax Update | FTA Clarifies the Meaning of “Director” and “Officer”
Kreston Menon
The UAE Federal Tax Authority (“FTA”) has issued a Public Clarification on the meaning of “director” and “officer” under the UAE Corporate Tax Law — an important development for businesses assessing Connected Person transactions under Article 36.
Key Takeaways:
A “director” is not determined merely by job title.
An individual must formally hold a position on the Board of Directors or an equivalent governing body under the entity’s legal or constitutional framework.
The definition of “officer” is broad.
It may include CEOs, CFOs, COOs, General Managers, and even authorised representatives with strategic or binding authority.
Substance over form matters.
The FTA will assess the actual authority, functions, and decision-making powers exercised by an individual — not just their contractual designation.
Why does this matter?
Payments and benefits provided to Connected Persons are deductible only to the extent they reflect market value. Therefore, businesses should carefully assess whether senior personnel or representatives may qualify as “officers” under the UAE Corporate Tax regime.
Businesses should consider reviewing:
• Governance and delegation structures
• Signing and approval authorities
• Management responsibilities
• Compensation and benefit arrangements involving Connected Persons
Our Insight:
This clarification is particularly relevant for multinational groups and family-owned businesses where strategic authority is often exercised informally or through delegated powers. Individuals without formal board appointments may still fall within the scope of “officers” for Corporate Tax purposes.
Proper documentation and arm’s length support for remuneration arrangements will be critical to mitigate potential deduction disallowances during FTA reviews or audits.
The official clarification issued by the FTA is available here.
