A Complete Guide for UAE Business Owners, CFOs, Founders, and Corporate Services Advisors
On 29 April 2026, the UAE Federal Tax Authority (FTA) issued Public Clarification CTP010, providing critical guidance on who qualifies as a “Director” or “Officer” under UAE Corporate Tax Law.
This clarification is highly important because Directors and Officers are automatically treated as “Connected Persons” under Article 36 of Federal Decree-Law No. 47 of 2022. As a result, payments made to them may only be tax deductible up to market value, and certain payments may need to be disclosed in the annual Corporate Tax return.
For UAE businesses, free zone entities, holding companies, trusts, and partnerships, understanding the scope of CTP010 is now essential for Corporate Tax compliance, transfer pricing assessments, and tax return preparation.
Why CTP010 Matters for UAE Businesses
The UAE Corporate Tax regime applies special scrutiny to payments made to Connected Persons. While salaries, bonuses, consultancy fees, and management remuneration are generally deductible business expenses, Article 36 limits deductions where the recipient is classified as a Connected Person.
Under Article 36(2)(b), Directors and Officers are automatically treated as Connected Persons. This creates two major compliance implications:
- Payments are deductible only to the extent they reflect arm’s length market value.
- Certain payments or benefits may require disclosure in the Corporate Tax return.
CTP010 clarifies exactly who falls within the definition of a Director or Officer and confirms that the FTA applies a substance over form approach when making this assessment.
Section 1: Who Is a “Director” Under UAE Corporate Tax Law?
Under CTP010, a Director is determined by formal appointment to a governing body, not by job title alone.
Definition of a Director
A Director is a natural person formally appointed to:
The appointment must be recognised under the entity’s governing documents or applicable legislation, including:
The FTA confirms that the following persons can qualify as Directors:
Important Clarification: A Job Title Alone Does Not Make Someone a Director
One of the most significant clarifications in CTP010 is that the word “Director” in a job title does not automatically create Director status for UAE Corporate Tax purposes.
For example:
|
Role |
Formally on Board? |
Director Under CTP010? |
|---|---|---|
|
Board Member |
Yes |
✔ Yes |
|
Sales Director |
No |
✘ No |
|
Non-Executive Director |
Yes |
✔ Yes |
|
Committee Member |
Yes |
✔ Yes |
|
Alternate Director |
Yes |
✔ Yes |
A person called “Sales Director” or “Managing Director” is not automatically a Director unless formally appointed to the Board or equivalent governing body under the company’s constitutional documents. However, such individuals may still qualify as Officers depending on their actual authority and role within the business.
Section 2: Who Is an “Officer” Under UAE Corporate Tax Law?
The definition of an Officer under CTP010 is broader than the definition of a Director.
Unlike Directors, Officers are identified based on actual authority, decision-making power, and conduct within the organisation, not simply formal appointment or title.
The FTA adopted a substance over form framework aligned with International Financial Reporting Standards Foundation IAS 24 on Related Party Disclosures.
Definition of an Officer
A person qualifies as an Officer if they meet one or more of the following criteria:
1. Strategic Management Authority
The person has authority and responsibility for planning, directing, and controlling the activities of the taxable person.
2. Strategic Decision-Making Power
The person can make strategic decisions relating to:
3. Binding Authority
The person can:
A person who performs only routine or administrative tasks without final authority will generally not qualify as an Officer.
Typical Officer Roles Under CTP010
The clarification identifies several senior management positions that commonly qualify as Officers, including:
Importantly, formal titles are not decisive.
The FTA explicitly states that a person labelled as a “Consultant” may still be an Officer if they exercise CEO-level authority or strategic control over the business. Likewise, a person with an impressive title may not qualify if they only execute instructions without independent authority.
Key Principle: Substance Over Form
CTP010 repeatedly reinforces a core Corporate Tax principle:
The FTA evaluates what a person actually does, not what their title says.
Examples:
The clarification also confirms that only natural persons can be classified as Directors or Officers. Companies and other juridical entities cannot hold these classifications.
Section 3: Director vs Officer Assessment Framework
CTP010 provides a practical framework for determining whether an individual is a Director or Officer for UAE Corporate Tax purposes.
Step 1: Formal Board Appointment
Is the person formally appointed to the Board of Directors or equivalent governing body?
Step 2: Strategic Decision-Making Authority
Does the person make final strategic decisions relating to financial, operational, or commercial matters?
Step 3: Binding Authority
Can the person legally or contractually bind the business?
Section 4: Real-World Case Studies from CTP010
The FTA included practical examples to demonstrate how the Director and Officer tests apply in real business situations.
Managing Partner of an Incorporated Partnership
A Managing Partner controls business activities and makes strategic decisions for the partnership.
Outcome: Officer → Connected Person because the individual exercises strategic and operational authority.
Trade Licence Manager Without Decision-Making Authority
An employee appears as “Manager” on the trade licence but only performs administrative work and cannot bind the company.
Outcome: Not an Officer because there is no strategic or binding authority.
CEO of a Subsidiary
A subsidiary CEO makes final operational decisions and signs binding agreements.
Outcome: Officer → Connected Person due to full strategic and contractual authority.
Head of HR with Strategic Authority
An HR Head controls workforce planning, organisational structure, and performance management strategy.
Outcome: Officer because the role involves strategic decision-making authority.
Employee Holding a Limited Power of Attorney (POA)
An employee receives a POA for a narrow administrative purpose without independent discretion.
Outcome: Not an Officer because the authority is administrative only.
Employee Holding a Discretionary POA
An employee receives broad authority to plan, direct, and control business activities.
Outcome: Officer because the POA grants strategic and binding authority.
Interim CEO Labelled as “Consultant”
A consultant effectively performs the role of CEO on an interim basis.
Outcome: Officer because substance overrides the contractual label.
Trustee of a Taxable Trust
A trustee controls and directs all trust activities.
Outcome: Officer because the trustee exercises full authority over the trust structure.
Section 5: Who Is Generally Excluded from the Officer Definition?
A person will generally not qualify as an Officer where all of the following conditions apply:
Section 6: UAE Corporate Tax Compliance Implications
1. Market Value Requirement
Payments or benefits provided to Directors and Officers must reflect arm’s length market value.
Any excess payment above market value may be disallowed as a deductible expense for UAE Corporate Tax purposes.
This is particularly relevant for:
2. Disclosure Obligations
Payments or benefits to Connected Persons that exceed prescribed disclosure thresholds must be reported in the annual Corporate Tax return.
Failure to disclose such payments correctly may expose the business to penalties, tax adjustments, or additional scrutiny during an FTA review.
3. Documentation and Governance Requirements
Because the FTA applies a substance over form test, businesses should maintain clear evidence of each person’s actual authority and responsibilities.
Recommended documentation includes:
Action Checklist for UAE Businesses
Businesses should take the following practical steps following the release of CTP010:
✔ Review all individuals holding board positions, C-suite roles, or powers of attorney
✔ Assess whether each person satisfies the Officer test based on actual authority
✔ Ensure all payments to Directors and Officers are supported by market-value benchmarking
✔ Review Corporate Tax return disclosure obligations
✔ Clearly document authority limits and reporting structures
✔ Conduct enhanced reviews for trusts, foundations, partnerships, family offices, and holding structures
Section 7: Which UAE Entities Are Affected?
The Officer rules under CTP010 apply broadly across all taxable persons in the UAE, including:
The clarification confirms again that only natural persons can be Directors or Officers.
Frequently Asked Questions (FAQ)
Not automatically as a Director. However, the business must assess whether the person qualifies as an Officer. If they exercise strategic authority or can bind the company, they will still be treated as a Connected Person.
Yes. However, CTP010 clarifies that where a person qualifies as both a Related Party under Article 35 and a Connected Person under Article 36, the Related Party classification prevails for Corporate Tax purposes.
Potentially yes. If the payment exceeds the disclosure threshold prescribed by the FTA, it must be disclosed. Since a CEO is generally an Officer, the payment must also reflect market value.
They are not a Director without formal board appointment. However, they may still qualify as an Officer if they exercise strategic control or possess authority to bind the company.
Possibly. If the representative independently makes strategic decisions or enters into binding agreements on behalf of the business, they may qualify as an Officer. If they merely execute pre-approved decisions, they may not qualify.
The clarification reflects the FTA’s interpretation of legislation effective from the commencement of Federal Decree-Law No. 47 of 2022, not merely from the date CTP010 was issued. Businesses should therefore review prior and current Corporate Tax positions carefully.
Yes. Holding companies, family offices, and similar structures are within the scope of the UAE Corporate Tax regime. Individuals exercising strategic control should be assessed under the Director and Officer framework.
Official Sources and References
The information in this article is derived from official UAE government and international accounting references, including:
- UAE Federal Tax Authority (FTA) CTP010 Public Clarification
- Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses
- FTA Corporate Tax Guides and Public Clarifications
- IAS 24 Related Party Disclosures (IFRS)
Final Takeaway
CTP010 is one of the most important UAE Corporate Tax clarifications released by the FTA because it shifts the focus away from titles and toward actual authority and control.
For UAE businesses, the key question is no longer what a person is called, but whether they:
Businesses that fail to properly assess Directors and Officers may face deduction disallowances, disclosure failures, transfer pricing scrutiny, or Corporate Tax penalties. Proper governance documentation, authority mapping, and Connected Person assessments are now critical parts of UAE tax compliance.
