VAT for UAE Artists & Influencers: A Checklist to Ensure Compliance
Social media influencers have taken the realm of branding by storm with the advent of platforms like Instagram, TikTok, Facebook, Twitter, LinkedIn and YouTube. The influencers have been making fame and profit by endorsing brands to their millions of devoted followers. However, many of the social media stars have been overlooking their VAT obligations until the Federal Tax Authority (FTA) issued a new guideline. As per the new FTA bulletin, the appropriate VAT rate is applicable for taxable supplies made by artists, and social media influencers and hence services of registered VAT consultants in Dubai becomes critical for such individuals.
The FTA defines artists as individuals who make supplies in their personal capacity as performers, singers, dancers, stage artists, make-up artists, DJs, poets, songwriters or any other individuals carrying out other activities. Social media influencers come under the net of VAT if they are individuals who provide their services using social media to promote products and services. Bloggers and YouTubers who make taxable supplies come within the definition of influencers and are liable to charge VAT. Read on to get a glimpse of various rules governing the VAT applicability on artists and social media influencers in the UAE.
Taxable Supplies made by Artists & Influencers
FTA states that normal rules can be applied for artists to determine the VAT obligations. If the supplies are taxable appropriate VAT rates are applicable. In the case of influencers, the following are some of the services that are typically subject to VAT:
- Online promotional activities performed for other businesses in return for a payment in any form, such as the promotion of a product through a blog, featuring a product in a video, or endorsing a business in a social media post
- Making a physical appearance for promoting a business, marketing & advertising activities
- Providing access to the social media networks of the influencer
- Any other services provided by the influencers for a consideration
If an Artist or influencer incurs any cost to make a supply and recovers the cost from its client, such reimbursement also falls within the scope of VAT in the UAE. The artists and influencers can avail the help of tax agents in Dubai, UAE, to determine the VAT applicability on the various services they provide.
VAT Registration for Residents & Non-Residents
Artists and social media influencers who make taxable supplies in the UAE (including zero-rated supplies) must register for VAT if the total value of supplies exceeds the mandatory threshold of AED 375,00 per annum. They can also opt for voluntary VAT registration in the UAE if the value of their taxable supplies and imports exceed the voluntary registration threshold of AED 187,500. For calculating the VAT threshold, the influencers and artists need to consider all the taxable supplies they make, including those supplies that do not come under their core artistic or influencer activity.
Artists and influencers who are not UAE residents are required to register for VAT provided they make taxable supplies with the place of supply in the UAE. No other person is obliged to account for VAT in such supplies, and there is no registration threshold for non-resident suppliers in such instances. FTA-approved tax agents in Dubai can help the artists and influencers register and account for VAT.
Reverse Charge Mechanism for Influencers
If a non-resident Artist or influencer contractually provides services to a VAT registered recipient in the UAE, they need not register for VAT as the recipient will account for VAT under the reverse charge mechanism. However, if Artist or SMI provides services to UAE-based unregistered persons and the place of supply falls in the UAE, there is no registration threshold. Therefore, if an Artist or influencer provides any services to an unregistered recipient, they should register for VAT in the UAE immediately and charge VAT on the supply.
Issuance of Tax Invoices
Artists and influencers are required to issue tax invoices when the taxable supply is made to an unregistered recipient or if the consideration for the supply made to a registered recipient does not exceed AED 10,000.
Input VAT Recovery
Artists and Influencers are eligible for the full recovery of input VAT. However, certain blocked items are listed as an exception for input tax recovery, such as certain entertainment services and purchased, leased or rented motor vehicles that are available for personal use.
VAT on Products, Gifts in Return for Services
Sometimes an artist or influencer receives a product such as a phone in return for services. In such cases, the products are treated as consideration. In cases where the consideration is wholly or partly monetary, the value of the supply is the monetary part plus the market value of the non-monetary part, less the VAT amount.
If the clients who provide the products to the artists or influencer are registered for VAT, they are required to account for VAT on the supply of goods. The barter arrangement is complex, and therefore, the FTA suggests assessing VAT implications on such supplies on a transaction-by-transaction basis.
Influencers Who Doesn’t Charge a Consideration
In cases where the VAT-registered artists or influencers do not charge any consideration for their services, the provision of deemed supply is applicable. They should account for VAT if the supply falls within the definition of a deemed supply. However, it should be considered on the basis of the facts on a case-by-case basis. It could be a complex situation, but the assistance of FTA-approved VAT consultants in Dubai will come in hand for the influencers and artists.
How Can Jitendra Chartered Accountants Help?
Influencers and artists in the UAE are required to immediately assess their VAT obligations as the FTA has clarified the applicability of tax on the services they provide. Since many of the influencers and artists have been overlooking their VAT obligations, they require the assistance of FTA-approved tax agents in Dubai to guide them through VAT registration; VAT returns filing, VAT accounting and record-keeping etc.
Jitendra Chartered Accountants (JCA) is one of the best VAT consultancy firms in Dubai that can provide all services to ensure VAT compliance. JCA’s tax agents in the UAE are registered with the FTA and are highly qualified to minimise the legal hassles for VAT registration and returns filing. Consult with the JCA today itself to ensure VAT compliance.