Key Updates on VAT Treatment for Directors’ Services in the UAE

The FTA has issued Public Clarification VATP037 on the VAT implications for directorship services provided by natural persons.
It updates the previous guidelines under VATP031 and reflects changes to Article 3(2) of the VAT Executive Regulations.
Directorship services provided by natural persons, whether UAE resident or not, for a remuneration and when appointed as a director on a board of any government entity or private sector establishment are not considered a supply of services for VAT purposes.
This means that such services are excluded from VAT, reducing the administrative burden for individuals serving as directors.
The new provision is effective from 1 January 2023, and transitional rules are provided to determine the VAT treatment of director services before and after this date.
Only director services performed by natural persons, whether resident in the UAE or not, can be excluded from the supply of services for UAE VAT purposes.

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