FTA clarification: who counts as a director or officer for UAE corporate tax?

May 4, 2026

Tax Star character comparing director and officer under UAE corporate tax with connected person label and FTA clarification theme

A lot of businesses already know the broad connected person rule.

If a payment or benefit goes to a connected person, the deduction is not automatic. It needs to match market value, and it also needs to be tied fully to the business.

The part that causes confusion is usually much simpler.

Who exactly counts as a director?
Who exactly counts as an officer?

That is where the recent FTA clarification helps. It gives businesses a more usable way to read these two terms, which matters for both deductibility and disclosure in the tax return.

Why this clarification matters

This is not just a definitions issue.

Under the corporate tax rules, payments or benefits made to a connected person are deductible only to the extent they match market value and are incurred wholly and exclusively for the business. A director or officer can fall within that connected person scope.

So this matters in real life when a business is paying amounts to people in senior roles, management roles, or decision making roles. It matters even more where the title looks ordinary, yet the authority behind the role is much bigger.

It matters for one more reason too. The FTA currently requires disclosure in the tax return for payments or benefits made to connected persons once the relevant threshold is crossed.

So if a business gets the director or officer test wrong, it can affect both the deduction review and the disclosure side.

Who counts as a director

The clarification takes a fairly direct view here.

A director is a person who holds a position on the board of directors. That can be an executive director, non executive director, temporary director, permanent director, or alternative director, as long as that person is appointed to the board. The clarification even extends this to board committee members.

The same idea applies where the business does not have a formal board of directors. In that case, the question becomes whether the person holds a position on an equivalent governing body under the law or under the entity’s constitutional documents.

So the label matters less than the legal position.

This means a person can still be a director where the governing body is called something else, like a board of trustees or board of governors, if that body plays the same governing role for that entity.

What does not make someone a director

This is one of the most useful parts of the clarification.

The FTA makes it clear that having the word director in a job title is not enough by itself.

So a title like sales director, marketing director, HR director, or finance director does not automatically make someone a director for this purpose. The person still needs to hold a place on the board, or on an equivalent governing body, based on the entity’s legal or constitutional setup.

That point will matter for a lot of businesses in practice. Many organisations use “director” as a senior management title without any board appointment behind it.

In that case, the next question is not “are they a director?”
The next question is “could they still be an officer?”

Who counts as an officer

This is where the clarification gets more practical.

An officer includes a person who has the authority and responsibility to plan, direct, and control the activities of the business. It can also include a person who has authority to make strategic decisions on financial, operational, or commercial matters. It can also include a person who has authority to enter agreements, or approve actions, that legally or contractually bind the business.

So the officer test is not built only around title.

It is built around real authority.

That means a person can be an officer even if they are not a board member and even if they do not have a classic C suite title.

The clarification gives some obvious examples that may fall into this category, like CEO, GM, CFO, COO, CCO, and an authorised representative with discretionary authority. But it does not stop there. It looks at what the person can actually do.

The easiest way to test an officer role

A simple question helps here:

Does this person have final strategic or binding authority?

If the answer is yes, the person may well be an officer.

If the answer is no, and the person is only following a framework set by others, carrying out pre approved tasks, or reporting decisions upward without final authority, the answer may be no.

That is the real line in the clarification.

The FTA says an officer does not include a person who does not have final or ultimate strategic decision making authority, or binding authority.

So the focus is not on seniority alone. It is on the power attached to the role.

Job title helps, but it is not the whole story

The clarification is clear on this too.

A formal title or appointment can be a useful sign. But it should not be used as the only test.

That means a person without a formal C suite title can still be an officer if, in real life, they control planning, direct activities, make strategic calls, or approve actions that bind the business.

The opposite is true too.

A person can have an impressive title and still not be an officer if the real authority sits elsewhere.

This is why businesses should not run this test from HR titles alone. They need to look at board documents, powers of attorney, approval levels, delegated authority rules, and actual conduct.

Examples that can catch businesses out

This is where the clarification gets very useful.

A general manager of an LLC can be an officer where that person has authority and responsibility for the overall management of the company.

A head of division can be an officer if that person has final strategic authority over financial, operational, or commercial matters. But if that same person only works within a framework set by the board or C suite, and follows those instructions, they may not be.

A head of HR can be an officer if they make final strategic calls on manpower planning, organisation structure, or performance management. But someone limited to routine HR work like payroll or leave handling, with no real discretion, may not be.

An employee named as manager in the trade licence, or named in board resolutions as a key officer, may be an officer if that gives them final authority to approve actions that bind the business.

An employee holding a power of attorney can be an officer if that power gives real discretion to plan, direct, control, or make final strategic decisions. But if the power is only administrative and limited to carrying out already approved tasks, that may not be enough.

Even an interim consultant can be an officer if that consultant is effectively doing the CEO role with the authority that comes with it.

The same logic can apply to trusts, foundations, permanent establishments, and unincorporated partnerships that are treated as taxable persons.

A few extra points businesses should not miss

The clarification adds a few points that are easy to overlook.

Only a natural person can be a director or officer of a taxable person for this purpose.

It also says that if someone is both a related party and a connected person, that person will only be treated as a related party for corporate tax purposes.

That matters since some people may sit close enough to the business to fall into more than one category on paper.

What this means for deductions and disclosure

Once a person falls into the director or officer bucket, the corporate tax impact becomes more practical.

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The business then needs to consider whether the payment or benefit:

matches market value, and
is incurred wholly and exclusively for the business

And where the relevant threshold is crossed, the business will need to think about disclosure of those payments or benefits in the tax return.

That means the issue is not only “who is this person in the org chart?”

It is also:

what authority do they actually have,
what is being paid to them,
does the amount reflect market value, and
does the payment need to be disclosed?

What to do now

A simple review will save a lot of confusion later.

Start with these steps:

Review board appointments and equivalent governing bodies.
List senior roles with real decision making or binding authority.
Check powers of attorney, delegated authority rules, and approval matrices.
Do not rely on job titles alone.
Review payments and benefits made to those people.
Check whether market value support is in place.
Check whether disclosure may be needed in the tax return.

Need help with your UAE corporate tax setup, review, or filing? Contact Tax Star now for a free demo.

FAQs

Does the word “director” in a job title make someone a director for corporate tax?

No. The title alone is not enough. The person needs to hold a board position or an equivalent governing body position.

Can a general manager be an officer?

Yes, if that person has authority and responsibility for the overall management of the business.

Can someone be an officer without a C suite title?

Yes. Real authority matters more than title.

Is routine operational work enough to make someone an officer?

No. The clarification points to final strategic authority or binding authority, not routine execution.

Can a power of attorney make someone an officer?

Yes, if it gives real discretion and final authority. No, if it is only administrative and limited to pre approved actions.

Do these rules apply only to companies?

No. The officer concept can apply across all taxable persons, including trusts, foundations, and unincorporated partnerships treated as taxable persons.