Clarification of the terms “Director” and “Officer” under Article 36 of the UAE Corporate Tax Law

The UAE Federal Tax Authority (FTA) issued Corporate Tax Public Clarification CTP010 on 29 April 2026 to clarify the meaning of the terms “director” and “officer” for the purposes of Article 36 of the UAE Corporate Tax (CT) Law relating to Connected Persons. The clarification also includes practical examples that assist in determining how these terms should be applied in practice.

The clarification is intended to assist Taxable Persons in determining whether payments or benefits provided to certain individuals are subject to Article 36, including deductibility limitations and disclosure requirements.

Under Article 36, payments or benefits made to Connected Persons by a Taxable Person are deductible only to the extent they:

• correspond to the market value of the services or benefits provided; and
• are incurred wholly and exclusively for business purposes.

The clarification emphasizes that the assessment of whether an individual qualifies as a “director” or “officer” should be based on the substance of the individual’s authority and role, rather than job titles alone.

Considering guidance provided in this clarification and practical examples, Taxable Persons should revisit their existing positions and determine the appropriate approach for upcoming transfer pricing compliance.

Definition of “officer”

The clarification adopts a broader and substance-based interpretation of the term “officer.” An individual may qualify as an “officer” where the person:

• has authority and responsibility for planning, directing, and controlling the activities of the Taxable Person, in accordance with the IAS 24 on Related Party Disclosures;
• has authority to make strategic financial, operational, or commercial decisions; or
• has authority to legally or contractually bind the Taxable Person.

The clarification further notes that the focus is on the actual authority and influence exercised by the individual rather than merely their formal designation/job title.

The clarification also provides several examples of individuals who may be considered officers, including: 

• An employee named as manager in the trade license or board resolutions, where this gives authority to approve actions
• An employee holding power of attorney that grants discretionary authority
• A General Manager of an LLC with authority and responsibility for overall management 
• A General Manager of a permanent establishment with authority and responsibility for planning, directing, and controlling the permanent establishment
• A Head of Division with authority to make final financial, operational, or commercial decisions
• A Head of Human Resources with final authority over manpower planning, performance management, or organizational structure
• An Interim CEO

Considering the above, Taxable Persons may need to reassess whether senior employees, general managers, authorized signatories, or individuals operating under delegated authority could fall within the scope of “officer”. This may affect:

• deductibility of remuneration and benefits; 
• Connected Person disclosures as part of UAE CT returns; 
• benchmarking and market value assessments; and 
• supporting documentation requirements for tax compliance (i.e. local file).

Definition of “director”

The clarification provides that a “director” refers to a natural person who holds a formal position on:

• the board of directors; or
• an equivalent governing body of the Taxable Person.

This includes executive, non-executive, temporary, permanent, and alternate directors, as well as members of board committees. Where there is no formal board, the term may extend to individuals serving on equivalent governing bodies such as boards of trustees or boards of governors, depending on the applicable governing legislation and constitutional documents.

The FTA also clarified that the mere inclusion of the word “director” in a job title does not automatically mean the person is a “director” for Article 36 purposes.

The FTA also clarified that:

• only natural persons can qualify as directors or officers; and
• where a person qualifies both as a Related Party and a Connected Person, the person will be treated as a Related Party for UAE CT Law.

The clarification has significant implications for Taxable Persons in identifying Connected Persons and assessing compliance obligations under Articles 36 and 55 of the UAE CT Law.

Taxable Persons should not rely solely on organizational charts or job titles when identifying Connected Persons. Instead, Taxable Persons should evaluate:

• actual decision-making authority;
• delegated powers;
• signatory rights;
• governance arrangements; and
• practical control over business operations.

In light of the clarified definitions and practical examples, Taxable Persons should reassess their current approach to Connected Person identification and related disclosures, ensuring that all relevant Connected Persons and payments or benefits provided to them are properly identified and disclosed in the CT return. This is particularly important given that the FTA currently requires disclosure where payments or benefits provided to Connected Persons exceed AED 500,000 in the relevant tax period.

Where individuals are identified as directors or officers under the clarified interpretation, Taxable Persons should ensure that remuneration and benefits are supportable from an arm’s length and market value perspective, with appropriate contemporaneous documentation maintained.

KPMG has a team of experienced transfer pricing professionals who can help you assess your current position, advise on the next steps, and assist with compliance and documentation requirements.

We are happy to discuss your specific requirements and determine the way forward. Please get in touch with your usual KPMG contact or any of the tax professionals below.