Do you provide individual and independent directorship services for companies in UAE? Does the fee you receive for such services exceed the mandatory VAT registration threshold, namely AED 375,000?
If your answer is YES to both the questions above, you are liable to register for VAT with the Federal Tax Authority (FTA) and charge VAT on the director fees
As per the guide on director’s services issued by the FTA, if the services provided by the director are: regular, ongoing and on an independent basis (executive or non-executive director on a board or a number of boards) and if the total value of taxable supplies made by the director exceeds the mandatory registration threshold, then the services provided by the director are taxable.
Federal Decree Law No. 8 of 2017 defines “taxable supply” as follows:
- A supply of goods or services
- For consideration
- By a person conducting business
- In the UAE; and
- Is not an exempt supply
Consideration for the Director services can include: money or other forms of payment, directors fee, bonuses, stock options, recharges for goods and services etc.
It is also important to note that “directorship services” is not an exempt supply and the Place of supply of the Directors services is important to identify where the supply takes place.
For more information please check the Value Added Tax guide published by the FTA in English on the FTA website (https://www.tax.gov.ae/pdf/director-services.pdf) .
Senior Legal Consultant, Corporate & Commercial