Is VAT charged on company director fees?

Answered by TI from the Federal Tax Authority’s own law · 15 September 2026. Guidance, not tax advice: rely on the official text.

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It depends. Director fees are generally VAT-able at 5%, but no VAT applies if the director is not a UAE resident or if one company just reimburses another for a common director's costs.

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The detail

Director services are a taxable supply of services for UAE VAT purposes, generally at the standard rate of 5% (FTA guide). However, the supply is outside UAE VAT scope if the director is a natural person not resident in the UAE, and no reverse charge applies. A cost allocation among companies for a common director is not a supply, while a fee charged under a contractual 'right to a director' is subject to VAT.1 2

What the law says

Fee charged by a company for appointing a director to another company is consideration for a taxable supply and subject to VAT at the default 5% rate (FTA guide on Director's Services).1 Based on FTA guidance
Services performed by a director who is a natural person not resident in the UAE are excluded from qualifying as a supply of services for UAE VAT purposes, and no reverse charge mechanism applies (FTA public clarification).2 Based on FTA guidance
Services rendered by a natural person, including a director performing their function, are supplies of services for UAE VAT purposes and will be taxable subject to meeting other conditions (FTA public clarification).2 Based on FTA guidance

What it depends on

VAT at 0% applies only if the director's services qualify as an export (e.g., services provided to a non-resident in certain circumstances) per Article 31 of the Executive Regulation.1 Based on FTA guidance
No supply arises when one company pays a common director's fees and allocates the costs to recover appropriate proportions from other companies.1 Based on FTA guidance
A fee charged under a contractual right to appoint a director (where one company invests in another) is treated as consideration for a taxable supply made by the director's original company.1 Based on FTA guidance

Check before you rely on it

Confirm whether the director is a UAE resident natural person.
Check if the fee is a cost allocation for a common director rather than a separate service fee.
Check if the supply qualifies as an export for 0% VAT.

Note: The supplied sources are FTA guidance (guides and clarifications), not legislation, so they represent the FTA's interpretation rather than the law itself.

Sources (2) — read the official text

1Directors ServicesFTA guidance

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Although the default rate is 5%, similar to the above, VAT may be charged at 0% if conditions in Article 31 of the Cabinet Decision No. 52 of 2017 on the Executive Regulations of the Federal Decree-Law No (8) of 2017 on Value Added Tax are met (i.e. if the supply is considered to be an export as per sections 2.3.1 and 2.3.2). 2.3.4. Common director An individual may act as a director of a number of companies. For convenience, one company may pay all the director’s fees and then allocate the costs to recover appropriate proportions from the others. The individual’s services, such as attending meetings or approving expenditure, are supplied by the individual to the companies of which they are a director. The services are supplied directly to the relevant businesses by the individual and not from one company to another. In this case, there is no supply between the companies and accordingly, no VAT is due on the share of money recovered from each company. 2.3.5. Right to a director This often occurs in situations where one company is investing in another and is exercising a legal or contractual right to appoint a director to the board of the company in which they are investing. The director is usually selected because of their specialised knowledge and is appointed to give expert advice to the other company. Typically, a fee is charged by the company appointing the director and is paid by the company to which the director has been appointed. This fee should be treated as consideration for a taxable supply made by the director’s original company and the fee is subject to VAT. 6 VAT Guide | Director’s Services | VATGDS1

Official PDF, p. 7Captured from the FTA website on 9 Sep 2026
2Performing the function of Director on a Board of Directors by a Na…FTA guidance

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."ألغراض ضريبة القيمة المضافة في الدولة of “supply of services for UAE VAT purposes”. For example, free-lance services rendered by a تعتبر الخدمات المقدمة كأعمال حرة من،على سبيل المثال third-party natural person who is not a Director قبل شخص طبيعي طرف ثالث ليس عضو مجلس إدارة during the meetings of a Board of Directors or any خالل اجتماعات مجلس اإلدارة أو اجتماعات أي لجنة منبثقة committee derived therefrom are considered to be بمثابة توريدات لخدمات ألغراض ضريبة،من المجلس supplies of services for VAT purposes and will be القيمة المضافة وستكون خاضعة للضريبة رهنًا باستيفاء taxable subject to meeting other conditions. .شروط أخرى In case the services are performed by Directors في حال تم تقديم الخدمات من قبل أعضاء مجلس إدارة غير who are not resident in the UAE, these services will فمن الواضح أنه سيتم استثناء هذه،مقيمين في الدولة evidently also be excluded from the qualification of الخدمات أيضا ً من التأهل كــ "توريد لخدمات ألغراض “supply of services for UAE VAT purposes”. There لن يكون هناك تطبيق."ضريبة القيمة المضافة في الدولة will be no application of the reverse charge آللية االحتساب العكسي أو حاجة للشخص الطبيعي للتسجيل mechanism or need for the natural person to .ألغراض ضريبة القيمة المضافة في الدولة register in the UAE for VAT purposes. القواعد االنتقالية Transitional rules Natural persons performing the function(s) of مهام/يتعين على األشخاص الطبيعيين الذين يؤدون مهمة Director on a Board of Directors, as defined above, مراجعة، كما هو معرّ ف أعاله،عضو مجلس إدارة must review their tax obligations for the period يناير1 التزاماتهم الضريبية للفترتين السابقة والتي تبدأ من .2023 both prior to and from 1 January 2023. The Date of Supply is governed by Articles 252 and من الالئحة3)26( و2)25( يخضع تاريخ التوريد للمادتين 263 of the Executive Regulation. The rules laid ستحدد القواعد المنصوص عليها في هذه المواد.التنفيذية down in these Articles will determine whether the يناير1 ما إذا كان أداء المهمة يعتبر بأنه قد تم قبل أو من performance of the function is deemed to take .2023 place before or from 1 January 2023. :أمثلة لالسترشاد Examples for guidance: - The natural person performs the function of يؤدي الشخص الطبيعي مهام عضو مجلس اإلدارة Director for the calendar year 2022 whereby وتمّ تحديد ونشر أتعاب عضوية2022 للسنة الميالدية fees from services to the Board, and any 1 مجلس اإلدارة وأي لجنة منبثقة منه للسنة اعتبارً ا من 4/13 -

Official PDF, p. 4Captured from the FTA website on 9 Sep 2026

Helpful?

It depends. Director fees are generally VAT-able at 5%, but no VAT applies if the director is not a UAE resident or if one company just reimburses another for a common director's costs.

What the law says:
- Fee charged by a company for appointing a director to another company is consideration for a taxable supply and subject to VAT at the default 5% rate (FTA guide on Director's Services). [1]
- Services performed by a director who is a natural person not resident in the UAE are excluded from qualifying as a supply of services for UAE VAT purposes, and no reverse charge mechanism applies (FTA public clarification). [2]
- Services rendered by a natural person, including a director performing their function, are supplies of services for UAE VAT purposes and will be taxable subject to meeting other conditions (FTA public clarification). [2]

What it depends on:
- VAT at 0% applies only if the director's services qualify as an export (e.g., services provided to a non-resident in certain circumstances) per Article 31 of the Executive Regulation. [1]
- No supply arises when one company pays a common director's fees and allocates the costs to recover appropriate proportions from other companies. [1]
- A fee charged under a contractual right to appoint a director (where one company invests in another) is treated as consideration for a taxable supply made by the director's original company. [1]

Check before you rely on it:
- Confirm whether the director is a UAE resident natural person.
- Check if the fee is a cost allocation for a common director rather than a separate service fee.
- Check if the supply qualifies as an export for 0% VAT.

Note: The supplied sources are FTA guidance (guides and clarifications), not legislation, so they represent the FTA's interpretation rather than the law itself.

Sources:
1. Directors Services — p. 7
2. Performing the function of Director on a Board of Directors by a Na… — p. 4

Written by AI from the FTA sources above and checked before display. Not tax advice or official FTA information - confirm with a tax adviser before you act. Full disclaimer

Is VAT charged on company director fees?

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