Is VAT charged on company director fees?

Answered by FinTaxIQ - TI from the Federal Tax Authority’s own law · 11 October 2026. Guidance, not tax advice: rely on the official text.

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It depends on who the director is. If a company provides a director, its fees are normally charged at 5% VAT. If a natural person acts as a board director, since 1 January 2023 their director fees are not treated as a VAT supply at all, so no VAT is charged on them.

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The detail

Director's fees paid to a corporate entity acting as director are a taxable supply of services, subject to the standard 5% VAT rate (0% only if export conditions under Article 31 of the Executive Regulation are met). Where the director is a natural person acting in that capacity on a Board, FTA guidance treats this as falling outside the definition of a 'supply of services' for VAT purposes from 1 January 2023 onwards, so no VAT applies; before that date, such fees were taxable if the person was VAT-registered. Non-resident natural person directors' services are, in any event, excluded from UAE VAT scope, with no reverse charge or registration requirement.1 2

What the law says

Director's fees are generally a taxable supply of services subject to the default 5% VAT rate, with 0% only if export conditions in Article 31 of the Executive Regulation are met (FTA guidance).1 Based on FTA guidance
FTA Public Clarification guidance states that services performed by a natural person in their capacity as a Board Director are, from 1 January 2023, excluded from the definition of a taxable supply of services for VAT purposes.2 Based on FTA guidance
Services by third-party freelance individuals who are not themselves Directors remain taxable supplies subject to normal conditions (FTA guidance).2 Based on FTA guidance

What it depends on

The outcome depends on whether the director is a corporate entity (fees generally taxable) or a natural person acting as a Board member (treated as non-supply from 1 Jan 2023).1 2 Based on FTA guidance
Natural persons must check whether the service was performed before or from 1 January 2023, as date of supply rules under Articles 25(2) and 26(3) of the Executive Regulation determine the applicable treatment.2 Based on FTA guidance
Non-resident natural person directors' services are excluded from UAE VAT scope entirely, with no reverse charge or registration obligation.2 Based on FTA guidance

Check before you rely on it

Confirm whether the director is a company or a natural person
If a natural person, check whether the fee relates to service performed before or after 1 January 2023
Confirm the director's residency status if a natural person

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

Read the article
."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?

What the law says:
- Director's fees are generally a taxable supply of services subject to the default 5% VAT rate, with 0% only if export conditions in Article 31 of the Executive Regulation are met (FTA guidance). [1]
- FTA Public Clarification guidance states that services performed by a natural person in their capacity as a Board Director are, from 1 January 2023, excluded from the definition of a taxable supply of services for VAT purposes. [2]
- Services by third-party freelance individuals who are not themselves Directors remain taxable supplies subject to normal conditions (FTA guidance). [2]

What it depends on:
- The outcome depends on whether the director is a corporate entity (fees generally taxable) or a natural person acting as a Board member (treated as non-supply from 1 Jan 2023). [1, 2]
- Natural persons must check whether the service was performed before or from 1 January 2023, as date of supply rules under Articles 25(2) and 26(3) of the Executive Regulation determine the applicable treatment. [2]
- Non-resident natural person directors' services are excluded from UAE VAT scope entirely, with no reverse charge or registration obligation. [2]

Check before you rely on it:
- Confirm whether the director is a company or a natural person
- If a natural person, check whether the fee relates to service performed before or after 1 January 2023
- Confirm the director's residency status if a natural person

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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