Dubai influencers must now declare free gifts to UAE tax authority
Influencers will need to pay VAT on goods received and holidays that they promote online…
A bulletin issued by the Federal Tax Authority states that Dubai artists and social media influencers must register for VAT if their earnings exceed Dhs370,000 in a 12-month period. Included in this taxable amount are “goods” (such as a phone) in return for their services.
Under these regulations, the company (if VAT registered) who issues the goods in exchange for services must also account for VAT on the supply of goods.
If the artist or influencer is working on a project in exchange for good as opposed to a monetary payment, the value of supply is the monetary part plus the market value of the non-monetary part, less the VAT amount.
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The term ‘artist’ includes performers, singers, dancers, stage artists, make-up artists, DJs, poets, song writers or any other individuals carrying out other activities.
‘Social media influencers’ are individuals who provide their services using social media to promote products and services such as bloggers, YouTube hosts, etc. Influencers can also be taxed on work that includes any physical appearances or marketing and advertising related activities.
Non-resident artists and influencers are also required to register for VAT while working in the UAE, provided that they are working for a non-registered recipient. If the company they are working for is VAT registered in the UAE, the artist or influencer will not need to register themselves.
What about overseas?
The FTA states within its bulletin that even if an artist or influencer works overseas to promote a UAE company, a five per cent VAT charge is applied. For example, “if a UAE based company, which owns a hotel outside the UAE, contracts with a UAE-resident artist or influencer to visit the hotel and post pictures on social media with a view to promote the hotel, the supply made by the SMI will be subject to VAT at 5 per cent”.