UAE's bloggers, YouTubers, Instagrammers subject to VAT

Tax applies to services like promoting product in blog, video

Tik Tok and Youtube app icon are seen on a smartphone in this illustration taken, September 15, 2020.

Tik Tok and Youtube app icon are seen on a smartphone in this illustration taken, September 15, 2020.

REUTERS/Dado Ruvic/Illustration

Social media influencers, such as bloggers, YouTubers and Instagrammers in the UAE, are subject to value-added-tax (VAT) for the services rendered or products supplied in the country, according to the latest bulletin from the Federal Tax Authority (FTA)

VAT applies to instances where an influencer or artist is promoting a product in a blog or a video, promoting a business via a social media post.  Any other online promotional activities performed on behalf of other businesses for a consideration may be subject to VAT as well.

VAT is also applied to any physical appearances, marketing and advertising related activities and any other services that influencers or artists may provide for a consideration.

Many freelancers working as an influencer or artist in the UAE have shot to fame in recent years, as social media usage has been on the rise in the Middle East region. Companies have also taken advantage of influencer marketing to gain more brand exposure.

It was only recently when the UAE government required anyone engaged in influencer marketing to obtain a license. However, for some time, the rules haven’t been quite clear as to whether or not these influencers should also be subject to taxes for the payment they received in exchange for their services.

VAT registration

Those who make a lot of money are certainly required to register for VAT.

“If an artist and social media influencers, who make taxable supplies, are required to register for VAT, provided the value of their taxable supplies and imports in the last 12 months exceeded, or is expected to exceed in the next 30 days, the mandatory registration threshold of 375,000 dirhams,” FTA said.

“Artists and social media influencers may also voluntarily register for VAT if the value of their taxable supplies and imports or taxable expenses incurred in the last 12 months exceeded or is anticipated to exceed in the next 30 days, the voluntary registration threshold of 187,500 dirhams.”

However, the FTA said that no registration threshold is required if an artist or influencer does business with an “unregistered UAE-based individual or business”.

“Therefore, where an artist or [influencer]provides any services to such an unregistered recipient, they will be required to register for VAT in the UAE immediately and charge VAT on the supply,” the FTA aid.

VAT is also applicable even in cases where an artist or a social media influencer receives goods, such as a mobile phone or laptop, as payment for their services.

“Where the entirety or part of the consideration is non-monetary, the value of the supply is the monetary part plus the market value of the non-monetary part, less the VAT amount,” FTA noted.

“At the same time, where the person supplying the goods to the artist or [influencer] in exchange for services is registered for VAT, such person will also need to account for VAT on the supply of goods.”

(Writing by Cleofe Maceda; editing by Seban Scaria)

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