“Financial”: the tax is due on bonuses for “legal” persons
Remunerations of “normal” board members will not be subject to “value added”
“Finance”: The decision will enter into force as of January 2023. Archive
Younis Haji Al-Khoury: “The date of the award should be taken into account to determine whether the provision of board member services is subject to the provisions of the new amendments or not.”
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The Ministry of Finance announced that, as of next January 1, 2023, value-added tax will not be due on the fees (remunerations) of members of the boards of directors of entities and establishments operating in the country from natural persons, while the value-added tax will remain due on the services of fees (rewards) of members of the boards of directors from Legal persons who authorize a natural person to act in their names as a member of the Board of Directors.
The Undersecretary of the Ministry of Finance, Younis Haji Al-Khoury, told «Emirates Today» that the members of the boards of directors, if they are individuals, then the tax will not be applied to the bonuses that they receive, while if the member of the board of directors is a company or a legal entity, as an institution or entity, then it is applied Here is the VAT on the rewards that are obtained.
normal person
Al-Khoury detailed that, according to the Cabinet’s decision to amend the executive regulations of the federal decree-law regarding value-added tax, which will enter into force as of January 1, 2023, the carrying out of the functions of a board member by a natural person in exchange for a reward (cash or in kind) in the board of directors A government entity or a private sector entity, will not be considered a remuneration for services for VAT purposes.
Before the amendment
Al-Khoury pointed out that, prior to the implementation of the new legislative amendment, tasks submitted by all categories of members of boards of directors, whether natural or legal persons, are treated as services subject to value-added tax if the member provides them on a regular, continuous and independent basis, and also If the sum of these taxable remunerations and any other subjectable remunerations, and the imports carried out by the member of the Board of Directors, exceed the mandatory registration limit.
And he continued: “In the event that the period for providing the services of a board member extends to include the date of January 1, 2023 (the effective date of the decision), then the date of the award should be taken into account, to determine whether the provision of board member services is subject to the provisions of the updated amendments or not.”
Al-Khoury added that if a board member registered for VAT no longer meets the requirements for mandatory or optional registration when the new decision enters into force, he must or may, as the case may be, cancel his registration for VAT purposes.
In the event that the member of the Board of Directors engages in activities other than performing the duties of a member of the Board of Directors, and these activities qualify as remuneration for goods, services or any other activities, only the performance of the duties of the member of the Board of Directors will be excluded from the taxable remuneration, for the services he provides after the first of January 2023.
"Finance": 62.4 billion dirhams in loans and green bonds in the UAE
The Undersecretary of the Ministry of Finance, Younis Haji Al-Khoury, revealed that the total green loans and issuances, whether bonds or sukuk in the UAE, have so far amounted to about $17 billion (62.4 billion dirhams), and reach about $1 trillion worldwide, pointing out that the country's strategy Climate neutrality of the Emirates 2050 requires investments of more than 600 billion dirhams in clean and renewable energy.
Al-Khoury stressed in a speech before the sessions of "Abu Dhabi Financial Week" that studies indicate that "green financing" can help open opportunities worth two trillion dollars in economic growth, and more than a million jobs in the countries of the Gulf Cooperation Council.
He added that the UAE leads global efforts in the clean and renewable energy sector, through its strategies and investments in the field of energy.
Al-Khoury indicated that sustainable financing is more than just a means for sustainable projects, as it is a solution to mitigate and manage current and future risks associated with social, environmental and climate risks.
He said that sustainable financing also comes with its own set of risks, which we as policymakers and regulators need to manage, especially financial stability risks.
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