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Post By: admin March 26 2021

Implementation of UAE VAT on Artists and Influencers

As the social media platforms are getting more and more audiences these days, there has been a significant increase in the professionals who recognize themselves as artists or influencers. With the far reaching attention that they have, such artists or influencers now play an inevitable role in promotional activities. Considering this evolving type of professional services, FTA has recently issued a statement detailing the VAT implications on services provided by artists and influencers which is discussed in detail here.

How to identify taxable supplies made by artists and influencers in UAE?

FTA has clarified that artists or social media influencers earning income in their personal capacity by way of providing services in various forms are making taxable supplies as per the UAE VAT rules. There are wide range of services that will come under the purview of taxable supplies, including those promotional activities such as featuring of products through social media platforms, endorsing products, launching new brands, being part of media campaigns in affiliation or collaboration with any business enterprises, engaged in blogging or different types of entertaining artistic performances etc.

Is issuing tax invoices mandatory for artists and influencers?

For any artists or influencers, who make taxable supplies in UAE, it is a mandatory requirement to issue tax invoices in the format as prescribed by the UAE VAT regulation. Such tax invoices should have all required elements including the value of supply made and VAT amount, if applicable.

Is VAT registration mandatory for artists and influencers in UAE?

The general VAT registration rules apply for the UAE based artist and influencers as well. If they make or provide taxable supplies with a place of supply as UAE, then they need to follow the VAT registration threshold rules. When such taxable supplies exceed the voluntary registration threshold limit of AED 187,500 per annum, they have the option to register for UAE VAT on a voluntary basis. When the amount of such taxable supplies in UAE exceeds or is expected to exceed the mandatory registration threshold of AED 375,000 per annum, then the professionals have to mandatorily register for UAE VAT.

Is VAT return mandatory for artists and influencers under UAE VAT rules?

It is mandatory for any VAT registered artists or influencers to file their periodic VAT returns with FTA. The frequency of such VAT returns will be as instructed by FTA during the registration. The supplies made whether as standard rate, zero rate or exempt, shall be categorized appropriately as applicable and need to be reported in the returns to determine the VAT liability. 

Is input VAT recovery possible for artists and influencers?

VAT registered artists or influencers can claim for input VAT recovery in their periodic VAT return with respect to the VAT expenses they have incurred in relation to the taxable supply of services/goods they have made. As applicable to any normal scenario, there are few exemptions listed for such recovery such as the VAT expenses relating to entertainment services, cost of motor vehicles for personal use by way of purchase, lease or rent etc.

What are the VAT implications for services provided in UAE by non UAE resident artists or influencers?

The VAT impact on services provided in UAE by any artist or influencer who is a non-resident of UAE will depend upon the VAT registration status of the recipient of such services. For cases in which the recipient is UAE VAT registered, then the provisions of reverse charge mechanism will apply and the recipient shall be responsible for accounting the VAT as applicable in the transaction. 

We encourage you to go through our article on reverse charge mechanism to know more about this: https://www.cdaaudit.com/blog/reverse-charge-mechanism-under-uae-vat-law 

Where the recipient has not registered for UAE VAT, the service provider, in this case, the non UAE resident artist or influencer will be responsible for registering for UAE VAT and for paying the VAT amount to FTA. It is to be noted that there will not be any threshold for VAT registration, when liability of VAT falls on such non UAE resident artists or influencers.

Will VAT apply for free services provided in UAE by artists and influencers?

Providing services at free of cost in UAE may attract the VAT provisions relating to deemed supplies. Please refer to our article on deemed supplies under UAE VAT https://www.cdaaudit.com/blog/what-is-deemed-supply-in-uae-vat to get more clarity on this subject. Once the conditions of deemed supplies are met, the person providing such services becomes responsible for the payment of VAT to FTA as applicable. However, the VAT treatments in such cases need to be assessed on a transaction by transaction basis and it is always suggested to get expert VAT opinion from qualified VAT professionals in this region before entering into such transactions. 

CDA on fulfilling VAT related services in UAE

Considering the fact that the VAT in the region is relatively new, it requires an extent of expertise for interpreting the VAT rules appropriately. Also applying correct VAT treatments on the transactions is essential for ensuring compliance with the VAT regulation. CDA has a team of competent VAT professionals who can support you in fulfilling your VAT related responsibilities in UAE and provide timely guidance to you on the frequent developments in VAT regulation. We can share with you value adding insights on various VAT and other regulatory business requirements, which will enable you to make sure of the smooth functioning of your operations here.

Hope you have a clear idea of ​​​​the implications of UAE VAT on artists and influencers. Still, have queries regarding VAT on artists and influencers? For further clarifications, feel free to contact CDA for one-hour free VAT consultation.