UAE Corporate Tax in Dubai: Transfer Pricing Rules, Connected Persons & FTA CTP010 Clarification
May 11, 2026
Background
The UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022) restricts the deductibility of payments made by a Taxable Person to its Connected Persons under Article 36. The payments are deductible only to the extent the service correspond with the Market Value and are incurred wholly and exclusively for business purposes.
The FTA has issued Public Clarification CTP010 to clarify the terms "director” and “officer" in the context of Articles 36b(2)(b) and 55(1) of the Corporate Tax Law. Importantly, this clarification does not change the law — it clarifies what the law has always meant, effective from the original date of implementation of the Corporate Tax Law.
Key definitions
"Director"
A director is a person formally appointed to the board of directors or an equivalent governing body (e.g., board of trustees, board of governors), as determined by the applicable law governing the entity's incorporation or its constitutional documents (e.g., memorandum of association, articles of association, partnership deed, trust deed).
Key points:
- A director can be executive, non-executive, temporary, permanent, or alternative director, provided they are formally appointed to the board.
- Members of board committees also qualify.
- Where no board of directors exists, the equivalent governing body is used as the reference point.
- A job title alone (e.g., "Finance Director", "Sales Director") does not render that person a director for Article 36 (2) (b) purposes unless they hold a formal board-level appointment.
- Important two-step approach: Where a person carries the title "director" but is not on the board or equivalent governing body, this does not end the analysis. It must then be separately assessed whether that person qualifies as an "officer" based on their actual authority and responsibility.
- Only a natural person can be a director of a Taxable Person.
"Officer"
An officer is defined based on the authority and responsibility, not the job title. A person qualifies as an officer if they meet any one of the following:
- They possess the authority and responsibility for planning, directing, and controlling the activities of the Taxable Person, consistent with the framework under International Accounting Standard 24 on Related Party Disclosures; or
- They have the authority to make strategic decisions relating to financial, operational, or commercial matters of the Taxable Person; or
- They have the authority to enter into agreements or approve actions that legally or contractually bind the Taxable Person.
As with directors, only a natural person can be an officer of a Taxable Person.
Critical limiting principle for Officer: A person is explicitly excluded from the definition of officer if they do not possess final/ultimate strategic decision-making or binding authority. This is a meaningful restriction. The senior employees who only report upward, operate within frameworks set by the C-suite or board, or follow instructions without independent authority do not qualify. The clarification's own examples make this clear for instance, a division head who reports to the C-suite and decides matters only within pre-set frameworks would not be an officer.
Indicative examples of officers include Chief Executive Officer (“CEO”), General Manager, Chief Financial Officer, Chief Operating Officer, Chief Commercial Officer, and authorised representatives with discretionary authority (C-suite). However, the test is always substance-based, not title-based.
The concept of officer applies to all Taxable Persons, including trusts, foundations, and fiscally opaque unincorporated partnerships.
Related Party vs Connected Person – Hierarchy Rule
If a Person is considered a Related Party as well as a Connected Person of a Taxable Person, such Person will only be considered a Related Party for the purposes of the Corporate Tax Law.
Conclusion
Public Clarification CTP010 provides practical guidance on interpreting “director” and “officer” under UAE Corporate Tax Law, particularly for Connected Person payment deductibility under Article 36. It reinforces a substance over form approach – director status depends on formal appointment, while officer status is driven by actual decision-making authority or the ability to bind the entity. Titles alone are not determinative, ensuring the rules apply to those with genuine control, not merely seniority.