Recently The Federal Tax Authority (FTA) has announced that supplies provided by artists and social media influencers for consideration are subject to Value Added Tax (VAT). Any online promotional activities performed on behalf of other businesses for a consideration will be subject to VAT. The promotional activities shall include promoting a product in a blog or a video or 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.
This announcement was shared in the latest Basic Tax Information Bulletin issued by the FTA on the VAT applicability on supplies provided by artists and social media influencers. The announcement also clarified that if an artist or influencer incurs any expenditure while 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 will be 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. They can 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. They shall be eligible for the recovery of any input VAT, with the exception of blocked items.
Any such taxable person must issue tax invoices for all supplies subject to the standard rate of 5 per cent. The taxable supplies shall also include the supplies which do not fall within the scope of their core artistic or influencer activity.
In case of a non-resident artist or social media influencer contractually provides services to a VAT registered recipient in the UAE, the recipient of such services who is obliged to account for VAT under the reverse charge mechanism. The artist or social media influencer would not be required to register for VAT.
When an artist or social media influencer receives goods apart from cash for their services, the goods are treated as consideration received in kind. The value of the supply is the monetary part plus the market value of the non-monetary part, less the VAT amount. Moreover, when the person supplying the goods to the artist for services rendered is registered for VAT, such person will be required to account for VAT on the supply of goods.
Like
1484
