Your CFO signs contracts, sets strategy, and makes the calls that shape the business. Your “Director of Sales” manages a team and chases targets. Both carry senior-sounding titles – but under UAE Corporate Tax, only one of them may be a Connected Person, with real consequences for how their pay is treated in your Tax Return.

FTA Public Clarification CTP010 (April 2026) draws the line on exactly who qualifies. Article 36 of the UAE Corporate Tax Law restricts the deductibility of payments to Connected Persons – a payment is deductible only to the extent it corresponds to market value, and only if incurred wholly and exclusively for the business. Overpay – even with genuine intent – and you lose the deduction.

Connected Persons include directors and officers of a Taxable Person. That sounds simple until you look at the average UAE business, which may have dozens of senior employees with titles like “Director,” “General Manager,” and “Chief.” For years it was not always clear which of these roles actually triggered the connected party rules. The question is no longer just about what it says on a business card. It is about actual authority.

A director is a person who formally holds a position on the board of directors – executive, non-executive, temporary, permanent, or alternate. If a company has no board, the equivalent governing body applies (board of trustees, board of governors), as defined in the incorporation or constitutional documents, such as a memorandum of association, articles of association, partnership deed, or trust deed.

Here is the catch: having the word “Director” in a job title is not enough.

An employee titled “Director of Finance” or “Sales Director” is not a director under Article 36(2)(b) of the Corporate Tax Law unless they actually hold a formal board seat. The title alone does not trigger the connected party rules. However, that same person may still qualify as an “officer” – which is where the analysis must go next.

“Officer” has a broader and more functional definition, anchored in the IAS 24 – Related Party Disclosures framework. A person qualifies as an officer if they satisfy any one of three tests:

Typical C-suite roles – CEO, CFO, COO, CCO, General Manager, and authorised representatives with discretionary authority – fall squarely within this definition. But formal titles are only an indicator, not the determining factor.

If someone lacks a C-suite title but, through their actual conduct, exercises final strategic authority or can bind the company, they are still an officer. Conversely, a person with an impressive title who simply executes instructions set by the board or CEO, and who has no final/ultimate decision-making authority of their own, is not an officer.

Two obligations attach once someone is classified as a director or officer.

First, any payment or benefit – salary, bonus, allowance, benefit in kind – must correspond to market value. The arm’s-length standard applies. Any amount that exceeds market value is not deductible. If a business overpays a director or officer relative to what an independent party would charge for the same service, the excess simply falls out of the deduction.

Second, payments to Connected Persons must be disclosed in the Tax Return once they exceed the specified threshold. The disclosure thresholds currently required by the FTA are:

The disclosure obligation under Article 55(1) applies to transactions with all Connected Persons – but you cannot assess it without first knowing who qualifies. Identifying your directors and officers is step one.

If a person qualifies as both a Related Party and a Connected Person of the same Taxable Person, they are treated as a Related Party only. The two classifications do not stack, and the Related Party rules take precedence.

Only a natural person (an individual) can be a director or officer. A corporate entity cannot hold either classification for these purposes. The concept applies to all Taxable Persons, including trusts, foundations, and unincorporated partnerships treated as fiscally opaque for Corporate Tax purposes.

CTP010 clarifies the application of three provisions of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Business (the “Corporate Tax Law”):

Article 36(1) – A payment or benefit provided by a Taxable Person to a Connected Person is deductible only to the extent it corresponds to the market value of the service or benefit provided, and only if incurred wholly and exclusively for the purposes of the business.

Article 36(2)(b) – A Connected Person of a Taxable Person includes its director or officer.

Article 55(1) – The FTA may require a Taxable Person to file a disclosure alongside the Tax Return, containing information about transactions and arrangements with Connected Persons. The FTA currently requires this disclosure where payments exceed AED 500,000 per year for Connected Persons and AED 40,000,000 per year for Related Parties.

The definition of “officer” aligns with the Key Management Personnel framework in IAS 24 – Related Party Disclosures. The Clarification takes effect from the date of implementation of the relevant legislation.