Boardroom Relief
The landscape of Value Added Tax (VAT) for board members in the United Arab Emirates (UAE) has changed! This blog post dives into a recent amendment to the UAE’s VAT regulations, specifically impacting Article 3 of Cabinet Decision N
The Change
Cabinet Decision No. 99 of 2022, issued in October 2022, introduced a new provision to the Executive Regulation of the Federal Decree-Law No. 8 of 2017 on VAT. This amendment affects Article 3, which deals with the definition of a “supply of services.”
What it Means for Board Members:
Prior to this amendment, services rendered by a board member to the company they serve on the board of were generally subject to VAT at the standard rate of 5%. This could have caused administrative burdens and tax implications for both companies and individual directors.
However, the new provision clarifies that the functions of a board member, performed by a natural person appointed as a director for any government entity or private sector establishment, are not considered a supply of services. This translates to significant relief for board members, who are no longer liable to register for VAT or charge VAT on their board service fees.
Key Points to Remember
- This amendment applies only to natural persons acting as directors, not companies providing board services.
- The exemption applies to both government entities and private sector establishments.
- It's crucial to stay updated on VAT regulations, and if you have any specific questions regarding your individual situation, consult a tax professional like Team TFAB.
This recent amendment simplifies the VAT treatment for board members in the UAE. By understanding this change, companies and directors can navigate the VAT landscape with greater clarity and avoid unnecessary administrative burdens.