The Federal Tax Authority (FTA) has issued Public Clarification CTP010, clarifying the meaning of “director” and “officer” for the purpose of payments to Connected Persons under Article 36 of the UAE Corporate Tax Law. This interpretation is broader than a job title — it follows real authority and decision-making power.
What Is CTP010 and Why It Matters
Under Article 36(1) of the Corporate Tax Law, a payment or benefit provided by a Taxable Person to its Connected Person is deductible only if and to the extent the payment corresponds with the Market Value of the service, benefit or otherwise provided by the Connected Person, and is incurred wholly and exclusively for the purposes of the Taxable Person’s Business. The definition of Connected Person under Article 36(2)(b) includes a director or officer of the Taxable Person. Where payments exceed the specified threshold, they must also be disclosed in the Tax Return under Article 55(1).
These provisions ensure that payments or benefits provided to directors or officers are deductible only if the amount does not exceed the Market Value, and are appropriately disclosed.
Who Counts as a "Director" Under UAE Corporate Tax Law
A director is a person who holds a position on the board — or its equivalent.
The term “director” refers to a Person that holds a position on the board of directors. A director can be an executive, non-executive, temporary, permanent, or alternative director, if they are appointed on the board of directors, including any member of a board committee.
If a Taxable Person does not have a board of directors, the term refers to a Person that holds a position on any equivalent governing body — such as a board of trustees or board of governors — as determined under the law governing incorporation, or the constitutional documents.
A Job Title Alone Does Not Make Someone a Director
The inclusion of the term “director” in a Person’s job title in itself does not render that Person a director for the purposes of Article 36(2)(b). Where a Person’s job title includes the term “director” but they do not hold a position on the board of directors or an equivalent governing body, they would not be considered a “director” for these purposes.
Who Counts as a Director Under CTP010
Includes:
- Members of the board of directors — executive, non-executive, temporary, permanent, or alternative, provided they are appointed on the board. Members of any board committee are also included.
- Members of an equivalent governing body — where there is no board, a position on a board of trustees, board of governors or similar body, determined by the law of incorporation or the Taxable Person’s constitutional documents.
Does NOT include:
- A person whose job title contains the word “director” but who does not hold a position on the board or an equivalent governing body. Such a person is not a director for Article 36(2)(b) purposes — though it remains necessary to evaluate whether they could be considered an “officer”.
Who Counts as an "Officer" Under UAE Corporate Tax Law
An officer is defined by authority — not by appointment or title.
The term “officer” includes any person who meets at least one of the following three tests. The concept applies to all Taxable Persons, including trusts, foundations, and unincorporated partnerships that are treated as fiscally opaque for Corporate Tax purposes.
The Three Tests for Being an Officer
Test 1: The IAS 24 Test — Planning, Directing and Controlling
Possesses the authority and responsibility for planning, directing, and controlling the activities of a Taxable Person, in accordance with the framework set out in International Accounting Standard 24 on Related Party Disclosures.
Test 2: The Strategic-Decisions Test
Has the authority to make strategic decisions in relation to financial, operational, or commercial matters of a Taxable Person.
Test 3: The Binding-Authority Test
Has the authority to enter into agreements or to approve actions that legally or contractually bind a Taxable Person.
Substance Over Title
An “officer” may include, but is not limited to, the CEO, GM, CFO, COO, CCO, and an authorised representative with discretionary authority — collectively, the “C-suite”. A formal appointment or job title may serve as an indicator but should not be relied upon as the sole criterion.
If a Person does not have a formal appointment or C-suite job title, but through their actual conduct effectively has the authority and responsibility for planning, directing and controlling the activities, or has the authority to make strategic decisions, take or approve actions that legally or contractually bind a Taxable Person, such a Person would still be considered an “officer”.
Does NOT include:
- A Person who does not possess the final or ultimate strategic decision-making or binding authority.
- Only a natural person can be a director or officer. If a Person is both a Related Party and a Connected Person, they are treated only as a Related Party for Corporate Tax purposes.
13 Worked Examples From the FTA
The FTA provided thirteen illustrative scenarios showing how the tests operate in practice:
- General Manager of an LLC — Has the authority and responsibility for the overall management of the LLC. | OFFICER
- Head of a division — with strategic authority — Has final or ultimate authority over financial, operational or commercial matters. | OFFICER
- Head of a division — without strategic authority — Only reports to and decides matters within frameworks set by the C-suite, board or equivalent body. | NOT AN OFFICER
- Head of HR — with discretionary authority — Has final authority on manpower planning, organisation structure, or performance management. | OFFICER
- Head of HR — routine functions only — Limited to payroll processing or leave management, without any discretionary authority. | NOT AN OFFICER
- Manager named on the trade licence / key officer in board resolutions — If this gives the employee final authority to approve actions that legally or contractually bind the Taxable Person. | OFFICER
- Holder of a power of attorney — Officer if the PoA grants discretionary authority; not an officer if it is purely administrative for predefined or pre-approved tasks. | DEPENDS ON POA
- Third-party secondee or outsourced management personnel — Not an officer if only authorised to conclude contractual negotiations after material terms are agreed; officer if they have final strategic or binding authority. | DEPENDS ON AUTHORITY
- General Manager of a Permanent Establishment — Possesses authority and responsibility for planning, directing and controlling the activities of the PE. | OFFICER
- Interim CEO engaged as a “consultant” — Possesses the authority and responsibility for planning, directing and controlling activities for the interim period. | OFFICER
- GM appointed by a natural-person Taxable Person — Officer of the Business if they possess authority and responsibility for planning, directing and controlling its activities. | OFFICER
- Trustee of a trust that is itself a Taxable Person — Officer if they possess authority and responsibility for planning, directing and controlling the activities of the trust. | OFFICER
- Court-appointed trustee or administrator — Officer if they possess authority to plan, direct and control activities; not an officer if they only carry out court-assigned duties without any discretion. | DEPENDS ON DUTIES
What This Means for Your Business
If your business pays a director or officer, the deduction is now tested on substance — not on the title on the contract.
Under Article 36(1), payments must meet two conditions:
- Market Value — the payment corresponds with the Market Value of the service provided
- Wholly and exclusively for business — incurred wholly and exclusively for the purposes of the Taxable Person’s Business
Four Steps We Recommend
Step 1: Map your decision-makers
Identify every natural person on the board or in any equivalent governing body, and every person whose actual authority meets one of the three officer tests.
Step 2: Look beyond job titles
Review trade licences, board resolutions, powers of attorney, secondment letters and consulting arrangements for hidden binding or strategic authority.
Step 3: Benchmark to Market Value
Ensure remuneration, fees and benefits paid to each director or officer correspond with the Market Value of the service provided.
Step 4: Prepare the disclosure
Capture qualifying transactions for the Connected Person disclosure submitted with the Tax Return where the FTA threshold is exceeded.
Speak to Your Advisor
GCG Structuring Advisory provides corporate tax, international structuring and compliance services. For guidance on your specific circumstances, contact:
[email protected]
gcg-structuring.com · Dubai, United Arab Emirates
Download Complete UAE Corporate Tax FTA Public Clarification - CTOP010
Disclaimer: This article summarises FTA Public Clarification CTP010 on the meaning of the terms “director” and “officer” for the purposes of Article 36 of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Business and its amendments. The Public Clarification states the position of the FTA and neither amends nor seeks to amend any provision of the legislation. The examples reproduced here show how the elements operate in isolation and do not show all possible interactions with other provisions of the Corporate Tax Law. They are intended only to provide general information and should not be relied upon for legal, accounting, regulatory or tax advice in respect of any specific juridical or natural person. Please consult your GCG Structuring advisor for guidance on your circumstances.
FAQ
1 What is FTA Public Clarification CTP010?
FTA Public Clarification CTP010 explains how the UAE Federal Tax Authority defines “director” and “officer” under UAE Corporate Tax. It confirms that classification depends on actual authority and role in decision-making, not just job title, for the purposes of Article 36.
2 Who is considered a director under UAE Corporate Tax law?
A director is a natural person who holds a formal position on the board of directors or an equivalent governing body. Under CTP010, this includes members of board committees and similar bodies defined by the company’s legal structure.
3 Does having “Director” in your job title make you a director for UAE Corporate Tax?
No. A job title alone does not make someone a director under UAE Corporate Tax. The individual must be formally appointed to the board of directors or an equivalent governing body to qualify.
4 Who qualifies as an officer under UAE Corporate Tax law?
An officer is a natural person who has authority to plan, direct, and control business activities, make strategic decisions, or legally bind the company. Under CTP010, this is determined based on actual authority rather than formal title.
5 What are the three tests for identifying an officer under CTP010?
A person is considered an officer if they meet at least one of three criteria: authority to plan, direct, and control activities (aligned with IAS 24), authority to make strategic decisions, or authority to legally bind the business. Meeting any one of these is sufficient.
6 Is the definition of an officer linked to IAS 24 under UAE Corporate Tax?
Yes. The FTA aligns the concept of an officer with IAS 24 principles on key management personnel, focusing on individuals who have authority to plan, direct, and control business activities.
7 Can someone without a formal title be considered an officer?
Yes. A person without a formal title can still be classified as an officer if they have actual authority over strategic decisions or the ability to legally bind the company under UAE Corporate Tax rules.
8 Are CEOs, CFOs, and other C-suite roles automatically considered officers?
Not automatically. These roles are typically considered officers, but only if the individual has actual strategic or binding authority. Title alone is not sufficient under UAE Corporate Tax rules.
9 Is a General Manager considered an officer under UAE Corporate Tax?
A General Manager is considered an officer if they have authority to plan, direct, and control the business or make strategic decisions. If their role is limited and lacks such authority, they may not qualify.
10 Does a power of attorney holder count as an officer?
It depends. A power of attorney holder is considered an officer only if they have discretionary authority to make strategic decisions or legally bind the company. If their authority is limited to predefined or administrative actions, they are not an officer.
11 Can consultants or outsourced managers be treated as officers?
Yes. Consultants or outsourced personnel can be classified as officers if they have actual authority to make strategic decisions or legally bind the company, regardless of their contractual designation.
12 What is the difference between a director and an officer under UAE Corporate Tax?
A director is defined by formal board membership, while an officer is defined by actual authority and decision-making power. These are separate classifications, and a director may also qualify as an officer if they perform executive functions.
13 Can a company or legal entity be a director or officer under UAE Corporate Tax?
No. Only natural persons can be classified as directors or officers under UAE Corporate Tax rules.
14 What is a connected person under UAE Corporate Tax?
A connected person includes individuals such as directors or officers who have a close relationship with the business. Payments to these individuals are subject to specific deductibility and disclosure rules under Article 36.
15 When are payments to directors or officers deductible under UAE Corporate Tax?
Payments to directors or officers are deductible only to the extent that they reflect market value and are incurred wholly and exclusively for business purposes, as required under Article 36.
16 Do payments to directors or officers need to be disclosed to the FTA?
Yes. Payments to connected persons, including directors and officers, must be disclosed in the tax return if they exceed the applicable threshold under UAE Corporate Tax rules.
17 Why does classification as a director or officer matter for UAE Corporate Tax?
Classification determines whether payments fall under connected person rules, including market value requirements and disclosure obligations. Misclassification can result in disallowed deductions and compliance risk.
18 Are all senior managers considered officers under UAE Corporate Tax?
No. Senior managers are considered officers only if they have final or ultimate authority over strategic decisions or the ability to legally bind the business.
19 What is the most common mistake businesses make when applying CTP010?
The most common mistake is relying on job titles instead of assessing actual authority. UAE Corporate Tax rules focus on substance over form, meaning real decision-making power determines classification.
