New Value Added Tax Regulations for the UAE: 1st June 2023

Thursday an announcement has been made by the Ministry Of Finance stating that the natural persons working as members of the board at the organizations and institutions would not be subjected to the Value Added Tax.

While this is going on, VAT will continue to be applied to director services provided by legal entities that designate a natural person to act on their behalf as a member of the board of directors.

According to the Cabinet Decision amending the Executive Regulation of the Federal Decree-Law on VAT, which will become effective on January 1, 2023, performing board member duties at a public or private establishment in exchange for compensation (cash or benefits in kind) will not be regarded as providing services for VAT purposes.

Tasks carried out by board members, whether they are natural or legal persons, are treated as taxable services subject to VAT prior to the implementation of the new legislative amendment, provided that they are provided on a regular, continuous, and independent basis and that the total value of all such taxable supplies, together with any other taxable services and import transactions, is greater than the mandatory tax registration threshold.