Over the past decade, bloggers, online influencers, and vloggers have made a brand-new industry. Take note, it is one that is very lucrative. For many, they’ve started out to be social media content creators as their hobby, uploading blogs, photos, and/or videos. And, it has fast become their full-time occupation! As a matter of fact, kids nowadays make it their dream job to be ‘influencers’ or ‘YouTubers’ rather than being footballers or pop stars.
Broadly speaking, social media influencers or performers are those that utilize their online presence, may it be through social media posts, videos, or articles, in influencing the opinions, choices, and actions of consumers or their ‘followers.’ In UAE, they are taxed and that’s what we’ll tackle in this article.
How much is the tax for social media influencers in UAE?
Fortunately for the industry, there is no personal income tax in UAE. However, services provided by social media influencers and performers are taxable with the standard rate of Value Added Tax or VAT. UAE’s standard VAT rate is at five (5) percent.
As the industry in the country continues to develop, it has now become imperative for influencers to declare their generated income. Should there be an oversight, they will have to pay the price. In short, in the event that you look or act like you are running a business, you will need to register for VAT with the Federal Tax Authority.
Read also: UAE VAT On Imports And Exports
Will I be taxed even when I’m only a part-time influencer in UAE?
Yes, both full and part-time social media content creators are required in undergoing the process of VAT registration in UAE. This means even if you’re working for an employer and doing content creation during your downtime, you must still report your earnings, particularly the one that you have earned online.
The amount of VAT that you will have to pay will depend on your income. The mandatory VAT registration threshold in UAE is AED 375,000. This means if you qualify to register for VAT as your annual taxable supplies or earnings have reached AED 375,00o, then the FTA VAT registration is compulsory.
As an online influencer or self-employed mandated to register for VAT in UAE, you may also claim some expenses- for the work that you do even when it is online. This helps in reducing your income that is deemed taxable. Essentially, VAT refunds in UAE, also referred to as VAT reclaim, can lower your annual VAT bill. Social media performers can claim expenses incurred for things like:
- Equipment e.g. cameras, laptops, and phones
- Phone and broadband bills
- Marketing costs
- Website expenditure
- Training or courses
Are payments-in-kind taxable under UAE VAT law?
IN spite of the recent regulatory changes, the lack of transparency makes it incredibly tricky for government regulators to distinguish between organic content and paid partnerships. As a matter of fact, there were concerns for social media starts not declaring what they have been rewarded or paid in exchange for endorsing goods and/or services.
While it is fairly straightforward for UAE regulators to tax paid-for or sponsored content whereby there is a certain fee that is agreed between parties, waters are murky for payments-in-kind. This can be in the form of experiences or goods that are provided by companies to creators in exchange for contracted deliverables. Even pairs of shoes and food blenders qualify as payments-in-kind. If it is a gift that is exchanged with an endorsement, then it is most definitely a payment-in-kind.
As such, UAE FTA legally obliges creators in declaring the financial value for items that they receive as payments-in-kind for tax returns. In order to verify the costs of specific services and items, creators are to refer to agreements from which they were provided. It is important for influencers and performers to be aware of such prior to signing an agreement. They are to make sure that they have hard copies of their agreements as they may be asked by tax officials should the influencers get audited.
Read also: VAT On Real Estate Market In UAE
How can process my VAT registration as an influencer in UAE?
To process VAT registration for influencers in UAE, the following documents are necessary:
- Copy of the trade license as a social media influencer
- Emirates ID
- Bank account details, IBAN
- Details of annual taxable supplies for the past twelve months (audited reports, balance sheets, bank statements)
- Projected expenses and revenues for the following thirty days
- List of countries you are doing business with
- Details of your social media activities and income
- Your registered address
Take note: it is best to have the aforementioned documents ready prior to starting the VAT registration process. The process can be made easier with the help of regulated tax agents in Dubai as they can gather, review, and advise you on the necessary documents for VAT registration.
To know more, contact us here in VAT Registration UAE today!