The recent clarification (CTP010) issued by the Federal Tax Authority (FTA) on April 29, 2026, provides long-awaited insight into the concept of “Connected Persons” under Article 36 of the UAE Corporate Tax Law (CT Law), with particular emphasis on the definitions of “director” and “officer.”

Summary of the Rules To Date

Under Article 36, any payment or benefit provided by a taxable person to a connected person is deductible only to the extent that it reflects market value, and is incurred wholly and exclusively for business purposes. 

A connected person includes the following:

• An owner of the taxable person.
• A director or officer of the taxable person.
• A related party of any of the above.

From a compliance perspective, taxable persons must identify all connected persons and ensure that all payments or benefits are at market value (aligned with Article 34 of the CT Law). Disclosure is required in the Connected Persons Disclosure Form (part of the UAE Corporate Tax return) when total payments exceed AED 500,000. The connected persons form requires the taxable person to include the name of the connected person, a description, the value of the payment or benefit provided, the market value of the payment or benefit, and any adjustments needed to meet the market value requirement.

The market value rules do not apply to:

• Listed entities on a recognized stock exchange.
• Regulated entities by the competent UAE authorities.
• Any other persons exempted by a Cabinet decision.

However, technically they are still subject to reporting requirements.

Key Clarifications From CTP010

Definition of “Director”

A director is a person formally appointed to the Board of Directors (or an equivalent governing body, such as a board of trustees or governors). This includes executive, non-executive, temporary, permanent, or alternate directors, as well as members of board committees. 

Importantly, the title “director” alone does not qualify an individual as a director unless the individual sits on such a governing body.

Definition of “Officer”

An officer is a person with authority over strategic decision-making, including financial, operational, or commercial matters. This aligns with the framework under IAS 24 (Related Party Disclosures). Officers typically:

• Have authority to plan, direct, and control financial, operational, or commercial activities.
• Have authority to enter into binding agreements or approve actions on behalf of the entity.

Examples may include C-suite roles such as CEO, CFO, COO, GM, or other individuals with ultimate decision-making authority. However, titles alone are not determinative, as substance over form applies. Individuals without final authority are not considered officers, even if they hold senior titles. 

Additional Considerations

• Only natural persons can qualify as directors or officers.
• Where an individual meets the definition of both a related party and a connected person, they will be treated as a related party for CT purposes. However, further clarification is required on:
  • How this classification will be reflected in the related party disclosure form, and
  • How it will interact with the exemptions provided under Article 36 of the UAE Corporate Tax Law, relating to connected persons (e.g., for listed and regulated entities).
• The concept of “officer” applies broadly across all taxable persons, including trusts, foundations, and unincorporated partnerships.

A&M’s View 

The clarification is a welcome development, as it provides much-needed certainty to taxpayers regarding the definitions of “director” and “officer”, areas that were previously subject to interpretation. This enhanced clarity helps resolve prior ambiguities and supports more consistent application of the rules while reinforcing that the overall framework places a strong emphasis on substance over form.

It also underscores the importance of undertaking a comprehensive fact-finding exercise to accurately identify individuals who qualify as connected persons. In parallel, taxpayers should perform a robust transfer pricing analysis to confirm that any payments or benefits are aligned with the arm’s length principle. When the aggregate value of such payments or benefits exceeds AED 500,000, they must be disclosed in the Connected Persons Disclosure Form and submitted as part of the Corporate Tax return.

Finally, it is important to note that any prior analyses relating to connected persons may need to be reassessed in light of this clarification well in advance of the next filing of the Corporate Tax return.

For further assistance, please reach out to us.