On 29 April 2026, the UAE Federal Tax Authority (“FTA“) issued Public Clarification CTP010, providing long-awaited guidance on what the Corporate Tax Law means by “director” or “officer” of a taxable person. The CTP010 has significant practical and financial consequences for businesses operating across the UAE and the wider Gulf, including remuneration structuring, board governance, transfer pricing compliance, and tax return disclosures.
The Regulatory Context
The UAE’s Corporate Tax Law (Federal Decree-Law No. 47 of 2022) introduced a framework that, by regional standards, was ambitious in scope. Among its more consequential provisions is Article 36, which governs payments made by a taxable person to its “Connected Persons.” Under Article 36(1), such payments are deductible only to the extent they correspond with the market value of the services or benefits provided. Such payments must be incurred wholly and exclusively for business purposes. Article 36(2)(b) confirms that a “director or officer” of the taxable person is a Connected Person for these purposes.
Separately, Article 55(1) empowers the FTA to require taxable persons to disclose connected-party transactions above a specified threshold as part of their Tax Return. The combined effect of these provisions is that payments to directors and officers are subject to both a deductibility cap and a disclosure obligation, making the scope of the definitions commercially relevant. The CTP010 fills that gap.
Unpacking the Definitions
“Director” is defined with relative precision. It means a person who holds a formal position on the board of directors or an equivalent governing body, as determined by applicable law or the entity’s constitutional documents. Crucially, the FTA has drawn a clear line: having the word “director” in a job title is not sufficient. A “Sales Director” or “Director of Operations,” however senior, does not become a Connected Person merely by virtue of their designation. What matters is a formal appointment to the governing body itself.
This distinction is particularly relevant in the UAE, where corporate structures — particularly LLCs, free zone entities, and foundations — often populate senior roles with titles borrowed from multinational practice without corresponding board appointments, especially during the early stages of business setup in UAE where governance frameworks are still evolving.
“Officer” is the more expansive and nuanced concept. Under CTP010, three functional criteria determine officer status: (i) possessing the authority and responsibility for planning, directing, and controlling the activities of the taxable person (following the IAS 24 framework for Key Management Personnel); (ii) having the authority to make strategic decisions on financial, operational, or commercial matters; or (iii) having the authority to legally or contractually bind the taxable person.
Importantly, a formal job title is neither necessary nor sufficient. A person without a C-suite designation who, in practice, controls the direction of the business will still be treated as an officer. Conversely, a person who merely implements decisions made by others, regardless of their title, falls outside the definition. The FTA makes clear that the test is one of substance over form.
Practical Implications
The examples provided in CTP010 must be examined carefully. Several patterns emerge with direct relevance to common UAE business arrangements:
Interim and outsourced executives. A consultant hired to fill a CEO role temporarily is still an officer if they exercise genuine planning and control authority. Similarly, a third-party secondee or an outsourced management provider is an officer if their mandate extends beyond concluding negotiations on pre-agreed terms to include independent strategic decision-making. This will require businesses using fractional executives or managed services arrangements to review both the scope of those mandates and the remuneration paid under them.
Power of attorney holders. An employee granted a power of attorney is an officer only if that instrument confers genuine discretionary authority over the business. Administrative POAs granted for limited, pre-approved tasks do not elevate their holder to officer status. UAE businesses routinely issue broad powers of attorney for practical convenience; this clarification signals that the FTA will look through the form of such instruments to the actual scope of authority they confer.
Heads of function. A head of HR, a divisional head, or a regional manager may or may not qualify as an officer, depending on whether they exercise final strategic decision-making authority or merely operate within frameworks set by the C-suite or board. The distinction matters: if such individuals receive above-market remuneration, the deductibility of that remuneration could be at risk if the recipient is found to be a Connected Person.
The Broader GCC Picture
CTP010 does not emerge in a vacuum. Saudi Arabia, Bahrain, Kuwait, and Qatar have each grappled, in different ways, with the taxation of intra-group and related-party payments, and the question of who constitutes a “key person” for transfer pricing and disclosure purposes is one that tax authorities across the region are increasingly scrutinising. The UAE’s approach to anchor the definition of “officer” in the IAS 24 Key Management Personnel concept is a sophisticated choice that aligns the Corporate Tax framework with international financial reporting standards already familiar to most large businesses.
This alignment is deliberate. The UAE’s Corporate Tax regime was designed to meet OECD standards and preserve the country’s position within the international tax architecture, including the BEPS framework. CTP010 reinforces that orientation: it is a clarification written for a jurisdiction that takes its place in the global tax order seriously.
What Businesses Should Do Now
The practical priority for businesses operating in the UAE is to map their organisational structures against the CTP010 definitions before the next Tax Return cycle. Three questions frame that exercise:
First, who within the organisation actually meets the functional definition of “officer”, regardless of their title? Second, are the payments and benefits provided to those individuals benchmarked against market value, and is there documentation to support that benchmarking? Third, are connected-party disclosures under Article 55 complete and accurate?
Businesses with complex governance structures, including joint ventures, foundations, trusts, or entities with external management arrangements, will need to apply particular care. The FTA’s emphasis on substance over form means that informal authority, if it exists, will be treated as real authority.
Conclusion
CTP010 is a welcome and well-constructed clarification. It resolves genuine ambiguity, provides useful examples, and reflects a regulatory authority that is maturing rapidly in its approach to corporate tax administration. For businesses in the UAE and increasingly across the GCC as the region’s tax regimes converge, the message is clear: governance structures and remuneration arrangements must be both commercially justified and properly documented.
Authors: Shantanu Mukherjee, Shruti Gupta
