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What you need to know now
Since 1 January 2023, appointed board functions performed by a natural person are not a supply of services for UAE VAT purposes.
The original article is preserved below as a historical record. Earlier deadlines, rates, offers and approval statements should not be used as current guidance.
- The exclusion is specific to natural-person board functions.
- Other consultancy or business income needs separate review.
- Pre-2023 services require the relevant timing analysis.
Read the question against the later change
The answer in this early news article cannot be applied to every current board payment. From 1 January 2023, appointed board functions performed by a natural person fall outside the VAT supply-of-services treatment described in the later FTA clarification. The original headline is preserved as a dated question. The current analysis must identify the individual, the appointment and the work covered, rather than applying an automatic VAT charge merely because board fees are paid.
What the paying company should keep
Maintain the appointment evidence, remuneration approval and description of the duties covered by the payment. Where the same person provides additional services, keep the separate contract and billing arrangements. The company’s accounts should make it possible to distinguish board remuneration from other professional expenses. That distinction is useful when reviewing a supplier invoice: a director’s title does not by itself determine whether a separately contracted advisory service follows the same treatment as the board function.
Review invoices without making assumptions
If an invoice includes VAT on a board-related payment, ask what service and period the invoice covers before accepting or rejecting it. A historic service period, a different service provider or additional consultancy work can change the question being considered. Preserve the invoice and the explanation obtained. Do not treat the later clarification as a reason to claim, reverse or disregard input tax without reviewing the actual supply and applicable timing rules.
Coordinate the company and individual records
A clear description helps both parties record the same transaction consistently. If a correction is needed, agree the underlying facts and obtain the appropriate revised document or follow the relevant procedure. The individual should separately consider the effect on any registration covering other business activities; the paying company cannot infer that the individual’s entire VAT registration has ended. Keep the current clarification with the review file and use the old article only to understand the pre-change discussion. Keep the remuneration approval identifiable.
YOUR NEXT STEPS
A practical way forward
- 01
Step 1
Identify who legally provides the service.
- 02
Step 2
Separate board remuneration from other contracts.
- 03
Step 3
Review registration if the income mix has changed.
CLEAR ANSWERS
Frequently asked questions
Does this exclude every service a director provides?
No. Consider the contract and capacity in which the service is supplied.
Does it automatically cancel an existing TRN?
No. Review the person’s remaining activities and deregistration position.
Read the original article First published 13 December 2017 · retained for context
This earlier article is preserved for context. Its rates, deadlines, approvals and announcements may have been superseded. Use the current guidance and official references on this page for your next step.
Will board members have to pay tax on their fees? According to multiple tax experts, the answer is yes.
Dubai: Board members of large companies will be required to pay a value-added tax of five percent on the fees they are given for their services, according to experts. Board members sit on the board of a company and vote on key business and corporate management issues, often acting as representatives of the shareholders. They are typically not employees of the company, and as a result, are paid a fee to attend board meetings and an annual retainer for their services.
-Gulf News
VERIFY THE DETAIL
Official sources & further reading
Source checks support this general guide. Your treatment depends on the facts, tax period and applicable legislation.
