Almost everyone’s first instinct as they wake up is to look for their phone to search their messages and social media profiles. They wake up scrolling, liking photos, commenting, sharing, tweeting, and so on. There is never a time when a person is not connected via a social media platform.
Federal Tax Authority has confirmed in a latest press release that supplies provided by artists and social media influencers for consideration are subject to Value Added Tax (VAT). The bulletin states that VAT is valid for supplies provided by artists and social media influencers, such as promoting a product in a blog or video and otherwise promoting a company in a Social Media post, including online promotion activities performed for consideration on behalf of other companies.
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.
When the word social media hits our mind, many think about YouTube, Instagram accounts, or just how many like they got from a tweet on that very day. In this turmoil of staggering like, shares and tweets not many people have noticed how social media has shaped our society, how addictive it is, and how it has influenced our thoughts, activities, security, and confidence.
Professionals, including social media influencers in the UAE, shall obtain the relevant licenses and submit VAT registration when the mandatorized VAT threshold of 375,000 AED is reached by the yearly taxable supplies. As young entrepreneurs continue to gain leverage not only in their homeland but internationally, tracking finances and adhering to legislation are becoming very complicated and their fan following is growing huge.
If the amount of their taxable materials, imports, or taxable expenditures in the previous 12 months surpassed or is expected to surpass in the next 30 days, the voluntary registration threshold of Dh187,500, artists and social media influencers may voluntarily register for VAT. Each taxable individual is subject to the normal rate of 5 percent to issue tax invoices for all materials.
Do Non-Residents Artists Come Under New Policy by FTA in UAE?
Social media influencers including individuals who serve on social media, such as blogs, YouTube, Twitter, etc. have to accept and work under the new policy. Influencers would also have to pay taxes for jobs that involve physical appearances or promotion and advertisement.
FTA said, “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,”.
Even if an artist or a social media influencer receives goods in exchange for their services, such as a phone or a laptop, VAT must be paid.
FTA added, “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,”.
Non-resident artists and performers who work in the UAE must also apply for VAT only when they work for a non-registered beneficiary. They also do not need to register if the company with which they are associated is registered in the UAE. Well, if you believe this is so, then you ought to note that the bulletin has changed the words for people who work abroad, too. In the case of a UAE business promoted by an artist or influencer, a 5% VAT fee would be levied.