UAE VAT Changes On Director Services – Effective From January 1st 2023
Nov 21, 2022 / Haroon Juma / VAT & Tax Blogs
The Ministry of Finance (MOF) has announced that starting January 2023, board members across institutions in the UAE will not be subject to value-added tax (VAT) except for legal persons who are appointed as board members to act in the name of the legal person (a corporate entity).
Currently, services performed by board members – both legal and natural are considered taxable services subject to VAT. This is based on the condition that the person is providing these services on a regular, continuous, and independent basis. UAE VAT Registration is required provided that the value of the taxable supplies as well as any other taxable services and import transactions exceed the mandatory tax registration threshold.
Director Services Changes
This change now makes performing the duties of a member of a board of directors at a government entity or private establishment in exchange consideration will not be considered as a supply of services for the purposes of VAT.
If a board member is registered for VAT, he/she will longer fulfill the requirement for mandatory or voluntary registration when the new provisions go into effect. Hence the person must deregister for VAT.
Any services and activities undertaken by the board member apart from their duties as a member of the board of directors would continue to be subject to VAT.
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