“Federal Taxes”: provided that it does not engage in other activities that require its continuation

Members of the boards of directors of companies are required to cancel their registration in the "added value"

Deregistration of tax registration does not result in forfeiture of the authority’s right to claim any due tax or administrative fines.

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The Federal Tax Authority said that “natural persons” who perform the task or duties of a board member must review their tax obligations before the date of January 1, 2023, and they must cancel their registration in value-added tax, provided that they do not engage in other activities that require its continuation.

And the authority indicated in clarifications, of which Emirates Today obtained a copy, that if the “natural person” engages in other activities during the performance of the duties of a board member, and it qualifies as supplies of goods, services, or any other activities, then in this case it will be excluded Performing the functions of a board member only from the registration limit account, as of the beginning of the new year.

Two cases of cancellation

And according to what was stipulated in Article (21) of Federal Decree-Law No. 18 of 2022, which included amendments regarding value-added tax, the registrant must submit a request to the Authority to cancel his tax registration in either of the two cases: “The first” if he stops making taxable supplies and the “second” if the value of the taxable supplies made by him during the 12 consecutive months is less than the voluntary registration threshold.

Also, according to the text of the article, the Authority may issue a decision to cancel the tax registration, in the event that it finds that maintaining it would prejudice the integrity of the tax system.

Also, according to the decree-law, “the deregistration of tax registration does not result in forfeiture of the authority’s right to claim any due tax or administrative fines.”

subject to tax

And according to what was stated in the “Federal Tax” clarification, that before the date of January 1, 2023, the services of members of the boards of directors who are natural individuals will be considered subject to tax, as long as they are provided by a member of the board of directors on a regular, continuous and independent basis, and the sum of the taxable supplies and import operations that he makes A member of the Board of Directors including, without limitation, his services as a Director, exceeds the mandatory registration limit.

She explained that a member of the board of directors may also, for example, be in the business of leasing commercial real estate, or other supplies, through individual establishments, and the value of these supplies must still be taken into account, for the purposes of the VAT registration limit.

The clarification of the Authority defines the natural member of the Board of Directors as the natural person, whether he resides in the country or not.

And the Ministry of Finance had announced earlier, that starting from the first of January 2023, and according to the amendments that were made to some provisions of the decree by a federal law regarding value-added tax, “the performance of the duties of a member of the board of directors by a natural person in exchange for a cash or in-kind reward in the board Administration, any of the government agencies or private sector establishments, will not be considered a supply of services that require the imposition of value-added tax.

• Cessation of taxable supplies cancels the tax registration.

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