The Federal Tax Authority (FTA) has clarified that services provided by artists and social media influencers (SMIs) for payments or rewards are subject to Value Added Tax (VAT).
These include, but are not limited 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; physical appearances; marketing and advertising related activities; providing access to any SMI's networks on social media, and any other services that the SMIs may provide for a payment or reward.
This announcement was shared in the latest Basic Tax Information Bulletin issued by the FTA on services by influencers and artists.
The bulletin clarified that if an artist or influencer incurs any costs in providing a service and subsequently recovers that cost from a client, the reimbursement falls within the scope of VAT in the UAE.
Those 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 AED 375,000.
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 AED 187,500.
VAT was introduced in the UAE in January 2018 at a rate of 5 per cent.