Are all board directors’ services taxable under UAE VAT?

No, only services by companies or directors offering extra services are taxable. Board services by natural persons are excluded under the new rule.

Does this rule apply to non-resident directors?

Yes, if a non-resident director only serves on the board as a natural person, their services are excluded from VAT.

Can Mubarak Al Ketbi help with VAT compliance for directors?

Yes, Mubarak Al Ketbi Chartered Accountants provides guidance on VAT compliance for directors and all business tax matters in the UAE.

Directors Function VAT Services in UAE

Will the Director’s Function by a Natural Person Be Considered a Supply of Services Under UAE VAT?

UAE supports businesses with tax-friendly laws. Every business must follow the current tax rules to avoid problems. Companies should know about VAT rules and changes. Sometimes, business competition and compliance make life hard, but experts like Mubarak Al Ketbi Chartered Accountants can help with tax advice.
This article explains the new VAT rules for services given by directors who are natural persons.

Treatment of Director’s Function Before the Amendment

Before January 1, 2023, all services by board directors counted as VAT services. The law applied to directors as natural persons or legal persons. If directors provided services regularly and their earnings passed the tax limit, those services became taxable.
So, before the new rules, director services were always counted as taxable supplies.

All About The Amendment

On January 1, 2023, the law changed. Now, services from directors as natural persons may not count as taxable supplies under UAE VAT, but only if certain conditions are met:

The service must be given by a natural person, not a company.
The person must be a board director (for a government or private entity).
Only natural persons can use this amendment; companies (legal persons) are not included.
If a legal person gives director services, it still counts as a taxable service under VAT.

Board of Directors

If a director is a natural person, their official board service is excluded from VAT as a taxable supply.
If the director offers other services (not as a board member), those still count as taxable under VAT.
If a non-resident director gives these services, those are also excluded, and the reverse charge rule doesn’t apply, so there’s no need for VAT registration.

Important points for board directors:

Only formal board service by natural persons is excluded from VAT.
Any other services (goods or other supply) are still taxable.
Non-resident directors who serve in this role are excluded from VAT.

Why Should Businesses Know These VAT Rules?

Every board of directors and company must:

Stay updated on tax law changes.
Make sure to file tax returns on time.
Avoid late fees or penalties.

Understanding these new rules helps businesses follow the law and save money.

How Mubarak Al Ketbi Chartered Accountants Can Help

Mubarak Al Ketbi Chartered Accountants has a skilled tax team ready to guide your business with all VAT and tax questions in the UAE. Our experts help you understand new amendments and build a strong compliance plan for your company.
When you work with us, you’re in safe hands—because we always put your business first!

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