This announcement was shared in the latest Basic Tax Information Bulletin issued by the FTA on the tax treatment of supplies provided by artists and social media influencers.
The Bulletin highlighted that VAT applies to any online promotional activities performed on behalf of other businesses for a consideration, such as promoting a product in a blog or a video or otherwise promoting a business on a social media post; any physical appearances, marketing and advertising related activities; providing access to any social media influencers’ networks on social media, and any other services that the SMIs may provide for a consideration.
The FTA clarified that if an artist or influencer incurs any costs in providing a supply and subsequently recovers that cost from its client, such reimbursement falls within the scope of VAT in the UAE.
UAE-based artists 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 Dh375,000.
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 Dh187,500. Any such taxable person must issue tax invoices for all supplies subject to the standard rate of 5%.
It is noteworthy, artists and social media influencers providing taxable supplies and services are eligible for the recovery of any input VAT, with the exception of blocked items such as certain entertainment services, and purchased, leased or rented motor vehicles that are available for personal use.
If a non-resident artist or social media influencer contractually provides services to a VAT registered recipient in the UAE, the artist or social media influencer would not be required to register for VAT as it is the recipient of such services who is obliged to account for VAT under the reverse charge mechanism.