The Federal Tax Authority’s public clarification CTP010 (April 2026) has finally answered a question that UAE businesses have been grappling with since UAE Corporate Tax came into force: who exactly qualifies as a “director” or “officer” — and therefore a Connected Person — under Article 36 of the Corporate Tax Law? The answer is not about job titles. It is about formal governance positions and real functional authority. Getting this classification wrong creates direct tax deductibility risk and disclosure obligations. This guide unpacks the FTA’s framework in full.
Key Takeaways
- A “director” is defined by formal appointment to a governing body, not by job title. A “Sales Director” who is not on the board is not a director for Article 36 purposes.
- An “officer” is defined entirely by function: the FTA applies three independent tests based on planning & control authority, strategic decision-making, and binding authority.
- Payments to Connected Persons are only tax-deductible to the extent they reflect Market Value. Businesses must review senior remuneration structures and ensure correct disclosure in their Tax Return.
What Makes Someone a “Director” Under UAE Corporate Tax Law?
The definition is structural, not functional. A director holds a formal seat on the board — or an equivalent governing body.
The FTA’s definition of “director” is deliberately positional. It covers anyone formally appointed to the board of directors, board of trustees, board of governors, or any equivalent governing body documented in the entity’s constitutional documents. This includes executive directors, non-executive directors, independent directors, interim or temporary directors, alternative directors, and members of any board committee.
The key principle: formal documentation controls. Appointment must be recorded in the memorandum of association, articles of association, partnership deed, or trust deed.
The critical distinction: having the word “director” in your job title is not sufficient. A “Finance Director” or “Regional Director” who holds no formal seat on the governing body is not a “director” for Article 36 purposes. However, such a person may still qualify as an “officer” — which must always be assessed separately.
The Three Limbs of “Officer” – Who Really Qualifies?
Unlike “director,” the “officer” classification is entirely functional. The FTA looks at what someone does and what authority they actually hold — not what their business card says. A person qualifies as an officer if they satisfy any one of three independent limbs.
Limb 1: Planning, Directing and Controlling Activities
The IAS 24 test: who has authority and responsibility for running the whole business?
The first limb borrows directly from International Accounting Standard 24 (IAS 24), which defines key management personnel (KMP) as those with authority and responsibility for planning, directing, and controlling an entity’s activities. Both elements must be present simultaneously — responsibility without authority is not enough, and authority without accountability also falls short.
In practice, this captures CEOs, Managing Directors, General Managers, and COOs. A country manager or regional president may also qualify if their scope genuinely involves institution-wide planning, not just executing within frameworks set by a global executive team.
Critically, the FTA has confirmed that substance trumps form. An interim consultant hired to perform the CEO role — even if titled “Advisor” on the engagement letter — qualifies as an officer if they have the actual authority and responsibility. The label on the contract is irrelevant.
Limb 2: Authority to Make Strategic Decisions
CFOs, CCOs, and senior function heads: who has the final word on financial, operational, or commercial strategy?
The second limb captures officers who may not run the entire business but hold final or ultimate authority over strategic decisions in specific domains. Three domains are specified, any of which independently satisfies this limb:
- Financial decisions: Final authority over capital structure, major investment, treasury policy, financing arrangements, or budget approval. A CFO who can unilaterally approve capital expenditure above a defined threshold qualifies. A finance manager implementing an approved budget does not.
- Operational decisions: Final authority over production capacity, supply chain design, or material changes to how the business functions. Strategic sovereignty over operations — not supervising defined processes.
- Commercial decisions: Final authority over market entry, product/service strategy, key pricing architecture, or major commercial partnerships. A CCO who owns these decisions qualifies. A business development manager who brings proposals upward for approval does not.
The FTA is explicit: the authority must be final or ultimate. A person who can recommend or propose but whose decisions require higher approval does not satisfy this limb. In multi-layered organisations, the critical question is: who has the last word for the UAE-registered entity?
This limb also draws the clearest line in corporate tax advisory practice. An HR head with final authority over manpower planning and organisational structure is an officer. An HR manager handling payroll and leave administration is not.
Limb 3: Authority to Bind the Taxable Person
The most commercially practical limb: who can create legally enforceable obligations for the company?
The third limb covers persons with authority to enter agreements or approve actions that legally or contractually bind the Taxable Person. This is separate from negotiating — it is the authority to conclude. A person who can sign a major supply contract, joint venture agreement, or financing arrangement as the final signatory qualifies.
Even without signing externally, a person with internal authority to approve actions creating binding obligations — such as sanctioning a legal settlement or authorising a regulatory commitment — also satisfies this limb.
Powers of attorney (POA) require careful analysis. The FTA draws a clear line between discretionary POAs (where the holder can independently determine and commit to material terms — officer status) and administrative POAs (where the holder executes pre-approved, already-decided transactions without independent discretion — not an officer). Third-party secondees and outsourced management personnel must be assessed by the same logic: execution without strategic discretion does not qualify.
Quick Reference: Role Classification at a Glance
Use this table to assess whether a senior person in your business is a Connected Person under Article 36.
| Role | Limb Satisfied | Officer? | Director? |
| CEO / MD / GM with full management authority | Limb 1 – Plans, directs & controls | ✓ Yes | – |
| CFO with final authority on financial strategy | Limb 2 – Strategic financial decisions | ✓ Yes | – |
| CCO / CSO who owns commercial strategy | Limb 2 – Strategic commercial decisions | ✓ Yes | – |
| Board member (formally appointed) | Formal appointment in constitutional docs | – | ✓ Yes |
| Interim CEO titled “consultant” | Limb 1 – Substance over form | ✓ Yes | – |
| Trade licence manager with binding approval power | Limb 3 – Binding authority | ✓ Yes | – |
| Division head who only executes C-suite directives | None – no final authority | ✗ No | ✗ No |
| HR manager (payroll & leave only) | None – routine functions only | ✗ No | ✗ No |
| Administrative POA holder | None – no independent discretion | ✗ No | ✗ No |
What This Means for UAE Businesses in Practice
FTA CTP010 has three immediate practical consequences that every UAE business should act on.
First, map your senior people against the three officer limbs — not against job titles. A person with “Director” in their title who sits on no governing body must still be assessed as a potential officer. A person with a modest title but genuine final strategic authority must be classified as an officer regardless of designation. This exercise is essential before filing the next Corporate Tax Return.
Second, review salary benchmarking and remuneration structures for all Connected Persons. Payments to officers and directors are only tax-deductible to the extent they reflect Market Value for services provided. Above-market compensation — even if commercially motivated — faces deductibility limits under Article 36.
Third, calibrate disclosure processes. Payments to Connected Persons that exceed the specified threshold must be disclosed in the Tax Return. The definition of Connected Person is now unambiguous and includes anyone qualifying as an officer under any of the three limbs, irrespective of formal title. One additional interaction to note: where a person qualifies as both a Related Party and a Connected Person, they are treated as a Related Party for Corporate Tax purposes.
Businesses with complex structures — including group companies, management secondments, and outsourced service arrangements — should consider a formal transfer pricing review alongside their Connected Person mapping, as the two frameworks interact closely under UAE Corporate Tax Law.
Conclusion
FTA Public Clarification CTP010 removes the ambiguity that surrounded the terms “director” and “officer” under UAE Corporate Tax Law. The FTA has drawn clear lines: directorship is a question of formal governance appointment; officer status is a question of functional authority, assessed across three independent limbs. For UAE businesses, the implications are practical and immediate — review your senior personnel classifications, benchmark compensation against Market Value, and ensure your disclosure obligations are correctly calibrated. Substance — not job titles — now controls how your business is assessed. If you need help applying this framework to your specific structure,
contact TSAC for expert corporate tax guidance.
Disclaimer: This blog is a commentary on FTA Public Clarification CTP010 (April 2026) and is intended for general informational purposes only. It does not constitute legal, tax, accounting, or regulatory advice. For advice specific to your circumstances, consult a qualified tax professional.