Who Counts as a "Director" or "Officer" Under UAE Corporate Tax Law?

The FTA's Public Clarification CTP010 defines the terms "director" and "officer" for the purpose of payments to Connected Persons under Article 36 of the Corporate Tax Law (Federal Decree-Law No. 47 of 2022). Understanding these definitions is critical for deductibility and disclosure compliance.

Why Does This Matter?

Article 36(1)
Payments to a Connected Person are deductible only to the extent they correspond to Market Value and are wholly for business purposes.

Article 36(2)(b)
A director or officer of a Taxable Person is classified as a Connected Person under the Corporate Tax Law.

Article 55(1)
The FTA may require disclosure of transactions with Connected Persons in the Tax Return if they exceed a specified threshold.

KEY DEFINITIONS

What Is a "Director"?

A "director" refers to a Person who holds a position on the board of directors, whether executive, non-executive, temporary, permanent, or alternative, including any member of a board committee.

No Board of Directors?
The term applies to any equivalent governing body (e.g., board of trustees or governors) as defined by the applicable law or constitutional documents (e.g., memorandum of association, partnership deed).

Job Title Alone Is Not Enough
Having "director" in a job title does not automatically make someone a director. They must actually hold a position on the board or equivalent governing body.

Defining "Officer"

An "officer" is a Person who meets at least one of the following criteria:

• Has authority and responsibility for planning, directing, and controlling the activities of a Taxable Person (per IAS 24 on Related Party Disclosures).
• Has authority to make strategic decisions on financial, operational, or commercial matters of a Taxable Person.
• Has authority to enter into agreements or approve actions that legally or contractually bind a Taxable Person.

The term "officer" does not include a Person who lacks final/ultimate strategic decision-making or binding authority.

WHO QUALIFIES

The "Officer" C-Suite & Beyond

An "officer" may include, but is not limited to, the following roles:

• CEO / GM – Chief Executive Officer or General Manager with overall management authority.
• CFO – Chief Financial Officer with strategic financial decision-making authority.
• COO / CCO – Chief Operating or Commercial Officer directing operational and commercial strategy.
• Authorised Representative – A representative with discretionary authority to bind the Taxable Person.

A formal title is an indicator, not the sole criterion. Actual conduct and authority determine officer status.

PRACTICAL EXAMPLES

1. LLC General Manager – Officer
A GM with authority and responsibility for the overall management of an LLC qualifies as an officer.

2. Division Head – It Depends
✓ Officer if they have final strategic decision-making authority.
✗ Not an officer if they only report to and follow instructions of the C-suite or board.

3. Head of HR – It Depends
✓ Officer if they have final authority over manpower planning or organization structure.
✗ Not an officer if limited to routine tasks like payroll or leave management.

4. Trade Licence Manager – Officer
An employee named in the trade licence or board resolutions as a key officer qualifies, if this grants final authority to approve binding actions.

EDGE CASES

Power of Attorney, Secondees & Consultants

Power of Attorney Holder
✓ Officer if the POA grants discretionary authority to plan, direct, control, or make final strategic decisions.
✗ Not an officer if the POA is purely administrative, performing predefined, pre-approved tasks without independent decision-making authority.

Secondees & Outsourced Management
✓ Officer if they hold final/ultimate authority to make strategic decisions or enter binding agreements.
✗ Not an officer if only authorised to conclude negotiations after material terms are agreed.

Interim CEO Titled "Consultant"
✓ Officer for the interim period if they possess the authority and responsibility for planning, directing, and controlling the Taxable Person's activities, regardless of the "consultant" title.

SPECIAL ENTITIES

Trusts, Foundations & Permanent Establishments

The concept of "officer" applies to all Taxable Persons, including trusts, foundations, and unincorporated partnerships treated as fiscally opaque for Corporate Tax purposes.

Trust Trustee
✓ Officer if they have authority and responsibility for planning, directing, and controlling the trust's activities.
✗ A court-appointed trustee or administrator performing only court-assigned duties without discretionary authority is not an officer.

Permanent Establishment GM
✓ Officer if the GM possesses authority and responsibility for planning, directing, and controlling the activities of the Permanent Establishment.

Natural Person's Business GM
✓ Officer if the appointed GM has authority and responsibility for planning, directing, and controlling the activities of the natural Taxable Person's business.

Only a natural person can be a "director" or "officer." If a Person qualifies as both a Related Party and a Connected Person, they are treated as a Related Party only.

KEY TAKEAWAYS

Summary: The Decision Framework

• Is the person on the governing board?
• Has binding strategic decision power?
• Neither condition applies.

The FTA's CTP010 clarification ensures that payments to directors and officers are deductible only at Market Value and are properly disclosed in the Tax Return. Substance over form is the guiding principle, actual authority matters more than job titles.

Stay Compliant with UAE Corporate Tax

Understanding who qualifies as a "director" or "officer" under CTP010 is essential for every business operating in the UAE. Ensure your payments to Connected Persons are at Market Value and properly disclosed in your Tax Return.

Review Your Organization Chart
Identify all individuals who may qualify as directors or officers based on actual authority, not just job titles.

Check Deductibility
Ensure all payments to Connected Persons correspond to Market Value and are incurred wholly for business purposes.

Found this helpful? Share this post with your finance and legal teams.

Disclaimer: Content posted is for informational and knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/interpretation of the publisher is based on the available Law, guidelines and information. Each reader should take due professional care before you act after reading the contents of that article/post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.