04/05/2026
New update regarding Director and officers salary as admissible expense
Purpose
This clarification explains the meaning of “director” and “officer” under UAE Corporate Tax rules, specifically for transactions with connected persons. Key Tax Rule (Article 36 & 55)
Payments to connected persons (including directors & officers) are:
Deductible only if at market value
Must be wholly for business purposes
Such transactions may need disclosure in tax returns if above a threshold
Definition of “Director”
A director is:
A person on the board of directors or equivalent governing body
Includes executive, non-executive, temporary, or committee members
Important:
Just having “director” in the job title does NOT count
Must actually hold a formal board position
Definition of “Officer”
An officer is someone who has real decision-making authority, such as:
Planning, directing, and controlling business activities
Making strategic decisions (financial, operational, commercial)
Signing agreements or legally binding the company
✔ Typical examples:
CEO, CFO, GM, COO, etc.
Any person with actual authority, even without formal title
❗ Not an officer if:
No final decision-making power
Only follows instructions or performs routine tasks
Substance Over Title
Actual authority matters more than job title
A person can be:
Not a “director” → but still an officer
Not formally appointed → but still treated as an officer based on actions
Practical Examples
GM with full control → ✅ Officer
Head of department with strategic authority → ✅ Officer
HR head doing only admin tasks → ❌ Not officer
Consultant acting like CEO → ✅ Officer
Employee with limited POA → ❌ Not officer
Other Important Points
Only natural persons can be directors/officers
Applies to all entities (companies, partnerships, trusts, etc.)
If someone is both:
Connected person and related party → treated as related party only
✅ Bottom Line
Directors = formal board members
Officers = people with real decision-making power
Payments to them must be:
At market value
Properly disclosed
