With the businesses in the UAE expected to align their operations and structure to comply with the evolving corporate tax rules, the Federal Tax Authority just announced a major update. The Public Clarification CTP010 lays down the definition of director and officer in relation to connected persons transactions and deductible expenses.

On paper, the clarification to Article 36 of the UAE Corporate Tax Law might be technical, but in reality, it speaks to something larger. Detailing how businesses will interpret the law and offering clarification regarding the concerns about who qualifies as a director and officer, along with the regulatory structure.

Beyond the initial uncertainty, the law has been clear on the deductible payments to connected persons. Only payments that are incurred exclusively for business purposes and reflect the true value of the services fall under its umbrella. However, the Public Clarification will enable corporate tax consultants to operate with greater certainty.