A senior job title tells you very little about a person's UAE Corporate Tax status. That is the central message of the Federal Tax Authority's Public Clarification CTP010, issued in April 2026, which explains who counts as a "director" and who counts as an "officer" when applying the Connected Person rules. The distinction is not cosmetic. It decides whether a payment to that individual is fully deductible, capped at Market Value, and reportable in the tax return.
For UAE business owners, CFOs, finance teams and their advisers, CTP010 turns a familiar habit, reading an organisation chart, into a compliance risk. This guide walks through the clarification in full: the legal basis, the tests for directors and officers, how to assess specific roles, the deductibility and disclosure consequences, and the practical steps to get the classification right before the FTA ever asks.
Why CTP010 matters
CTP010 sits on top of three separate rules in the Corporate Tax law, and that is exactly why it deserves attention. The label attached to an individual feeds directly into how their pay is treated for tax.
- Deductibility. Under Article 36(1), a payment or benefit to a Connected Person is deductible only to the extent it matches the Market Value of what that person actually provides, and only if it is incurred wholly and exclusively for the business.
- Definition. Article 36(2)(b) expressly names a director or officer of the taxable person as a Connected Person. CTP010 tells you how to identify those two roles.
- Disclosure. Article 55(1) lets the FTA require details of Connected Person payments in the tax return where a threshold is crossed.
Put together, a single classification decision flows straight through to taxable income and disclosure exposure. Get it wrong, and you risk disallowed deductions, incorrect schedules, and avoidable questions on audit. The Federal Tax Authority's Corporate Tax pages and the FTA Corporate Tax FAQs provide the wider framework, and CTP010 itself sits within the FTA Guides, References and Public Clarifications library.
The legal basis for CTP010
CTP010 is an interpretation, not a new rule. It reads existing provisions of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, the law that underpins the entire UAE Corporate Tax regime. The clarification states the FTA's position and does not amend the legislation, so it is effective from the date the relevant provisions took effect.
The articles that matter here are:
| Article | What it covers |
|---|---|
| Article 1 | Definitions, including Business, Connected Person, Market Value and Person |
| Article 34 | The arm's length principle for Related Party transactions and the transfer pricing methods |
| Article 35 | The definition of Related Parties and Control |
| Article 36 | Payments to Connected Persons and the Market Value deduction limit |
| Article 53 | The obligation to file a tax return within nine months of the tax period end |
| Article 55 | Disclosure of Related Party and Connected Person transactions, and the 30-day document request power |
| Article 56 | Record keeping for seven years |
The UAE Ministry of Finance Corporate Tax page confirms the self-assessment nature of the regime, and the arm's length framework that Article 36 borrows from is explained in the FTA Transfer Pricing Guide (CTGTP1). For the full text of the clarification, see the official CTP010 Public Clarification PDF.
Related Parties versus Connected Persons: a necessary distinction
Before applying CTP010, you need to separate two concepts that are easy to blur.
Related Parties (Article 35). This is the broader, structural concept. It covers relationships built on ownership of 50% or more, control, and, for natural persons, kinship up to the fourth degree. Related Party status decides whether the arm's length principle in Article 34 applies to a transaction. Our guide on how to identify Related Parties under UAE Corporate Tax walks through the ownership, control and kinship tests in detail.
Connected Persons (Article 36). This is a narrower, role-based concept aimed at individuals close to ownership or control: owners, directors, officers, and their Related Parties. Connected Person status decides whether a payment is limited to Market Value and whether it must be disclosed. CTP010 lives entirely inside this second concept. For the wider picture, see Connected Persons under UAE Corporate Tax and who is covered by the transfer pricing rules.
The two can overlap, and CTP010 tells you how to resolve that overlap, covered further below.
Who qualifies as a director?
As a confirmed legal position under CTP010, a director is a natural person who holds a position on the board of directors, or on an equivalent governing body, as determined under the law governing the taxable person's incorporation or its constitutional documents.
This is deliberately broad in one direction and strict in another.
- It captures executive, non-executive, temporary, permanent and alternate directors, as well as members of board committees.
- Where a taxable person has no board of directors, it captures a position on an equivalent governing body, such as a board of trustees or a board of governors, as set out in the entity's constitutional documents, including a memorandum of association, articles of association, partnership deed or trust deed.
Here is the point that trips businesses up: a job title containing the word "director" does not, on its own, make someone a director for Article 36. A Marketing Director or Commercial Director who does not hold a formal board seat is not a director in this sense. Substance governs, not the wording on a business card.
That said, a person whose title says "director" but who has no board appointment is not automatically outside the rules. The next question is whether that same individual is an officer.
Who qualifies as an officer?
The officer test is broader than the director test and turns entirely on actual authority. As a confirmed position under CTP010, an officer includes any natural person who meets one or more of the following:
- Has the authority and responsibility for planning, directing and controlling the activities of the taxable person, aligned with the framework in International Accounting Standard 24 on related party disclosures.
- Has the authority to make final or ultimate strategic decisions on financial, operational or commercial matters.
- Has the authority to enter into agreements or approve actions that legally or contractually bind the taxable person.
The clarification lists typical examples: a Chief Executive Officer, General Manager, Chief Financial Officer, Chief Operating Officer, Chief Commercial Officer, and an authorised representative with discretionary authority, described collectively as the "C-suite".
Crucially, a person who does not hold final or ultimate strategic decision-making power, or the authority to bind the business, is not an officer. A formal appointment or a senior title can be an indicator, but it is not the sole criterion. Someone without any C-suite title who, through their actual conduct, effectively plans, directs and controls the business, or who can make binding strategic decisions, is still an officer.
Why job titles alone do not decide the outcome
The theme running through CTP010 is substance over form. The FTA is explicitly directing businesses to test what a person actually decides and what they can commit the business to, rather than the label on the payroll.
This matters because UAE businesses commonly use titles such as Managing Director, General Manager or Head of Division without a matching grant of formal authority, and equally hand real decision-making power to individuals whose titles sound junior. A title-based review will over-classify some employees while missing others who genuinely hold binding authority. The correct evidence base is the delegation of authority: board minutes, signing and approval limits, powers of attorney, and the actual conduct of the individual.
What "actual authority" means in practice
The scenarios in CTP010 make the actual-authority test concrete. The table below summarises the illustrative examples the FTA provides. Treat these as illustrations that depend on the specific facts, not as automatic rules.
| Role or situation | Officer? | Why |
|---|---|---|
| General Manager of an LLC with full management authority | Yes | Holds authority and responsibility for overall management |
| Division head with final strategic profit-and-loss authority | Yes | Makes final strategic financial and commercial decisions |
| Division head who only reports to and follows the C-suite | No | No final or ultimate strategic authority |
| HR head with final authority over manpower planning and organisation structure | Yes | Holds ultimate strategic decision authority in the relevant sphere |
| HR head limited to payroll and leave with no discretion | No | Routine functions only, no strategic authority |
| Authorised signatory named in the trade licence or board resolutions | Yes | Where it grants ultimate authority to bind the business |
| Power of attorney holder performing pre-approved administrative tasks | No | Limited to predefined actions, no independent strategic authority |
| Consultant hired as interim CEO with planning authority | Yes | Actual authority matters, not the "consultant" label or absence of an employment contract |
| Secondee or outsourced manager only concluding pre-agreed contract terms | No | Not an officer where key commercial and legal terms are already agreed |
| Trustee with full authority over the trust's activities | Yes | Plans, directs and controls the trust |
| Court-appointed administrator who only follows court orders | No | No discretionary decision-making authority |
| General Manager of a Permanent Establishment with full authority | Yes | Holds authority and responsibility for the PE's activities |
The consistent thread is that genuine, final decision-making power makes a person an officer, while a senior-sounding role without that power does not.
How to assess specific roles
Bringing the tests together, here is a practical way to think through the most common UAE roles.
Owner-managers
An owner who also runs the business can be both a Related Party (through ownership) and a Connected Person (as an owner and, usually, an officer). Owner-manager pay deserves particular scrutiny because the same person can sit on both sides of the payment decision. Separate the return on ownership (dividends, capital gains) from remuneration for services actually performed (salary, bonus, management fee, rent, loan terms), and test each on its own basis.
General managers and division heads
A General Manager with full management authority is typically an officer. A division head is an officer only where they hold final strategic authority; a division head who executes decisions made above them is not.
HR heads and authorised signatories
An HR head is an officer where they hold ultimate authority over strategic matters such as manpower planning or organisation structure, but not where the role is confined to routine administration. An authorised signatory is an officer where the authority granted lets them ultimately bind the business.
Power of attorney holders and consultants
A power of attorney that grants discretionary authority to plan, direct and control, or to make binding strategic decisions, points to officer status. A power of attorney limited to predefined administrative tasks generally does not. A consultant with no employment contract can still be an officer if they genuinely run the business, as the interim CEO example shows.
Trustees and PE managers
The officer concept applies across all taxable persons, including trusts, foundations and unincorporated partnerships treated as fiscally opaque. A trustee with real authority over a trust's activities is an officer. A General Manager of a Permanent Establishment with authority and responsibility for the PE's activities is an officer of that PE.
Why only natural persons can be directors or officers
As a confirmed position under CTP010, only a natural person can be a director or an officer for these purposes. A corporate board member, a management company, or any other legal entity cannot hold either role. This does not put such entities outside the Connected Person and Related Party framework entirely; they can still be caught through ownership, control or kinship routes elsewhere in the law. But for the specific director and officer tests in Article 36, the analysis is confined to individuals.
How the overlap rule works
A single individual can meet both the Related Party definition in Article 35 and the Connected Person definition in Article 36 at the same time, for example an owner-manager who also sits on the board. CTP010 resolves this cleanly: where a person is both a Related Party and a Connected Person of the taxable person, that person is treated only as a Related Party for Corporate Tax purposes.
In professional interpretation, this matters most as a guard against double counting. The practical error to avoid is restricting the same payment twice, once as a Related Party amount and again as a Connected Person amount. The overlap rule determines which set of provisions and disclosure schedules technically applies. It does not remove the underlying requirement that the payment reflect Market Value.
Deductibility implications under Article 36
Once an individual is confirmed as a director or officer, and therefore a Connected Person, Article 36 controls the deduction. Two tests must both be met before a payment or benefit is fully deductible.
| Test | What it requires |
|---|---|
| Market Value | The payment must reflect what an independent party would have paid for the same service, role or benefit |
| Wholly and exclusively | The payment must genuinely relate to the business, not to the individual's personal benefit or their status as an owner |
Any amount above Market Value, or any element not incurred wholly and exclusively for the business, is not deductible to that extent, even where the payment was properly authorised as a matter of corporate governance. Supporting Market Value draws on the same arm's length analysis used across transfer pricing, benchmarked against the actual role performed rather than the job title. The OECD Transfer Pricing Guidelines 2022 and the wider OECD base erosion and profit shifting (BEPS) framework remain the international reference points the UAE regime follows.
An important exception sits in Article 36(6): the Market Value deduction limit does not apply where the taxable person's shares are traded on a Recognised Stock Exchange, or where the taxable person is subject to the regulatory oversight of a competent authority in the UAE. Both are treated as carrying sufficient independent oversight of related payments.
Disclosure implications in the tax return
Correct classification also drives disclosure. The UAE Corporate Tax Return includes a Connected Persons Schedule. Under current FTA guidance, this schedule is completed where the aggregate value of payments or benefits to a single Connected Person, together with that person's Related Parties, exceeds AED 500,000 in the tax period.
Two points are worth stressing. First, the AED 500,000 Connected Persons threshold is independent of the AED 40 million Related Party disclosure threshold, and the two schedules are tested separately. Second, a payment below the disclosure threshold is not automatically compliant; the Market Value and wholly-and-exclusively tests apply to every Connected Person payment regardless of size. The mechanics of completing the schedules are set out in our UAE Transfer Pricing Disclosure Form guide, and the end-to-end picture in the UAE transfer pricing compliance guide.
The return itself is filed within nine months of the tax period end under Article 53, and a Corporate Tax Registration Number is a precondition, which you can obtain through the FTA Corporate Tax Registration service.
Documentation expectations
Because the analysis draws on governance, employment and tax together, the evidence file should too. For each senior role, businesses should be able to produce:
- Board and committee membership records confirming formal appointments.
- Constitutional documents and trade licence details relevant to governance.
- Job descriptions, employment contracts and organisation charts.
- A delegation-of-authority matrix and signing or approval limits.
- Powers of attorney and evidence of bank and contract approval authority.
- Board resolutions showing who makes final strategic decisions.
- A short written conclusion, per role, explaining why the individual is or is not treated as a director or officer.
- Remuneration benchmarking data supporting Market Value, plus supporting agreements for any non-salary payment such as rent or loans.
Records supporting Corporate Tax positions, including this analysis, should be retained for seven years in line with Article 56, and produced within 30 days if the FTA requests them under Article 55. You can confirm the underlying legislation through the FTA legislation library. Where documentation thresholds are met, Ministerial Decision No. 97 of 2023 sets the Master File and Local File requirements that sit alongside the disclosure.
Practical business implications
CTP010 changes the standard businesses are held to in three concrete ways.
- A title-based review is no longer defensible. Finance can no longer classify Connected Persons from the payroll alone; the exercise now requires input from HR, legal and governance.
- Owner-manager pay carries the highest risk. Where one person authorises and receives a payment, the FTA will expect clear evidence of Market Value and a genuine business purpose.
- Deductibility and disclosure move together. A misclassification can produce both a disallowed deduction and an incorrect schedule, compounding the exposure.
Common mistakes to avoid
- Relying on job titles instead of testing actual authority.
- Assuming a "director" title always means a director, or that the absence of a C-suite title always means no officer.
- Treating a company or management entity as a director or officer, when only natural persons qualify.
- Restricting the same payment twice when an individual is both a Related Party and a Connected Person, instead of applying the Related Party treatment only.
- Overlooking non-cash benefits such as housing, vehicles or school fees provided to owners and senior management.
- Assuming a payment below AED 500,000 needs no Market Value support.
- Leaving benchmarking and governance evidence until after the return is filed.
A practical compliance checklist
- Map every senior role against the director and officer tests, using governance records rather than the organisation chart.
- Identify all owners, directors and officers and cross-check against ownership, board composition and delegation of authority.
- Apply the overlap rule so anyone who is both a Related Party and a Connected Person is treated only as a Related Party.
- Benchmark each Connected Person payment against Market Value for the role actually performed.
- Separate ownership returns from service remuneration for owner-managers.
- Test the AED 500,000 threshold per Connected Person and complete the schedule where it is exceeded.
- Reconcile the disclosure to the ledger and financial statements before filing.
- Retain the governance and benchmarking file for seven years, ready to produce within 30 days.
For structured support, SBC's Corporate Tax practice maps directors, officers and other Connected Persons, our Transfer Pricing team benchmarks payments against Market Value, and our Audit and Dispute Resolution practice supports you if the FTA questions a position. You can view the full range on our services page, read the summary in our CTP010 insight, or browse related articles on the insights hub.
Frequently asked questions
Is a job title with the word "director" enough to make someone a director?
No. CTP010 is explicit that a title alone is not sufficient. A person is a director only where they hold a position on the board of directors or an equivalent governing body through a formal appointment. If the title includes "director" but there is no board seat, the person is not a director for Article 36, though they may still be an officer.
Is a CEO or general manager always an officer?
Generally yes, where they hold the authority to plan, direct and control the business and to make or approve binding decisions. CTP010 lists CEO, general manager, CFO, COO, CCO and authorised representatives as typical examples, and confirms an interim CEO with planning authority also qualifies.
Can a company be a director or officer for Corporate Tax?
No. Only natural persons can be directors or officers for these purposes. A legal entity cannot hold either role, although it may still be a Connected Person or Related Party through other routes in the law.
How are payments to directors and officers taxed?
They are deductible only to the extent they correspond with Market Value and are incurred wholly and exclusively for the business. Any excess over Market Value is not deductible, and payments may need to be disclosed where they exceed the FTA's prescribed threshold.
What happens if a person is both a Related Party and a Connected Person?
Under CTP010, that person is treated only as a Related Party for Corporate Tax purposes. This prevents the same payment being restricted twice, while the Market Value requirement still applies.
Does a payment below AED 500,000 escape the rules?
No. The AED 500,000 figure is a disclosure threshold, not an exemption. The Market Value and wholly-and-exclusively tests in Article 36 apply to Connected Person payments of any size.
Conclusion
CTP010 reframes a simple-looking question, who is a director or officer, into a substance-based test that reaches deductions, disclosure and audit risk. The businesses that handle it well are not the ones with the tidiest organisation charts; they are the ones that assess real authority, apply the overlap rule correctly, benchmark Connected Person payments against Market Value, and keep the governance evidence to prove it.
Your next step is straightforward: review every board member and senior executive against the CTP010 tests now, before the next owner, director or officer payment is booked without support. To pressure-test your related-party and Connected Person positions ahead of filing, explore our insights hub or contact our advisors for a confidential conversation.
This publication is for general information only and does not constitute professional advice. Please consult your SBC advisor before acting on any matter covered here.
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