UAE Ministry of Finance: Supply of services for natural persons serving as members of boards of directors will not be subject to VAT

VAT will still apply on the director services for legal persons serving as board members

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A Staff Reporter

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Picture for illustrative purposes. - File photo
Picture for illustrative purposes. - File photo

Published: Thu 17 Nov 2022, 2:17 PM

The Ministry of Finance (MOF) has announced that starting from January 1, 2023, director services undertaken by natural persons serving as members of boards at entities and institutions across the UAE will not be subject to value added tax (VAT).

Meanwhile, VAT will still apply on the director services for legal persons serving as board members that delegate a natural person to act in the name of the legal persons as a member of the board of directors.


Younis Haji Al Khoori, Undersecretary of Ministry of Finance, noted that as per the Cabinet Decision amending the Executive Regulation of the Federal Decree-Law on VAT, which will go into effect on 1 January 2023, performing the duties of a member of a board of directors at a government entity or private establishment in exchange for a reward (monetary or benefits in kind) will not be considered as a supply of services for the purposes of VAT.

Younis Haji Al Khoori, Undersecretary of Ministry of Finance. - Supplied photo
Younis Haji Al Khoori, Undersecretary of Ministry of Finance. - Supplied photo

Al Khoori stated that before the new legislative amendment is implemented, tasks performed by board members – natural and legal persons alike – are treated as taxable services subject to VAT, on the condition that the member provides them on a regular, continuous, and independent basis, and if the total value of these taxable supplies as well as any other taxable services and import transactions, exceeds the mandatory tax registration threshold.


“Where the director services provided by a member of a board span 1 January 2023 (effective date of the Cabinet Decision), the date of supply should be considered to determine whether such services are subject to the amended provisions or not,” Al Khoori said.

He also indicated that if a board member registered for VAT no longer fulfils the requirements for mandatory or voluntary registration when the new provisions go into effect, such person may or must, as the case may be, deregister for VAT purposes. Moreover, in the event that a board member undertakes activities besides their duties as member of the board of directors, and if these activities qualify as taxable supplies of goods, services, or other activities, then only their activities as a board member provided after 1 January 2023 will be excluded from the taxable supplies.



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