Effective from January 1, 2023, services performed by natural persons as members of a Board of Directors for government or private sector entities are no longer considered a supply of services for VAT purposes. This contrasts with the previous rule where such services were taxable.

Key Changes and Their Impact

Transitional Rules

Directors must review their VAT obligations for periods before and after January 1, 2023. The date of supply is governed by specific rules determining whether the service falls within the new provision.

Exemption Scope:

  • Only services performed in the formal capacity as a Director on the Board or any derived committee are exempt.
  • Other services provided by the Director may still be taxable if they meet the conditions for taxable supplies.


  • Directors who no longer meet the requirements for mandatory VAT registration must deregister.
  • If a Director engages in other taxable activities, these must still be accounted for in determining VAT registration thresholds.

Source: VATP037 – Performing the function of Director on a Board of Directors by a Natural person (Please be informed that Public Clarification VATP037 replaces Public Clarification VATP031.)