VAT applicability for services of Artists and Influencers
As per the Basic Tax Information Bulletin issued by the UAE’s Federal Tax Authority (FDA), services provided by the following are subject to VAT –
- Artists such as musicians, dancers, stage performers, make-up artists, DJs, poets, song writers and
- Social Media Influencers (SMI’s) – those who use social media to promote products and services. These activities include any promotional activities such as product promotion on their social media accounts, blogging, YouTube hosting, physical appearances, marketing and advertising related activities or any other activities provided for a consideration.
For the purposes of calculating the threshold, artists and influencers should consider all the taxable supplies that they make, even if such supplies do not fall within the scope of their core artistic or influencer activity.
Compulsory and Voluntary VAT Registration
The Artists and influencers are required to register for VAT if 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 compulsory registration threshold limit of Dh375,000.
They may voluntarily register for VAT if 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 voluntary registration threshold limit of Dh187,500. Any such taxable person is subject to VAT at the standard rate of 5 per cent.
VAT for Non-resident Artists or SMI’s
Non-resident Artists and SMIs are also required to register for VAT where they make any taxable supplies with the place of supply in the UAE and no other person is obligated to account for VAT on such supplies. In such a situation, there is no registration threshold for non-resident suppliers.
Where a non-resident Artist or SMI occasionally provides services to a VAT registered recipient in the UAE, the Artist or SMI would not be required to register for VAT in the UAE as they are required to register for VAT under the reverse charge mechanism. However, where the Artist or SMI provides services to UAE-based unregistered individuals or businesses and the place of supply falls in the UAE, there is no registration threshold. Therefore, where an Artist or SMI provides any services to an unregistered recipient, they will be required to register for VAT in the UAE immediately and charge VAT on the supply.
Where an Artist or SMI receives goods in return for their services, the goods are treated as consideration for the services. Where the entire 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. At the same time, where the person supplying the goods to the Artist or SMI in exchange for the services is registered for VAT, such person will also need to account for VAT on the supply of goods. As the concept of barter arrangements (goods or even services) is complex, the VAT implications of such supplies should be assessed on a transaction-by-transaction basis.
Compliance Requirements
- Artists and SMIs must issue tax invoices or simplified tax invoice, as required for all taxable supplies at the standard rate of 5%.
- Artists and SMIs should accurately disclose the transaction in their VAT returns and discharge the VAT liability.
Input VAT Recovery
Artists and social media influencers providing taxable supplies and services may apply for the recovery of any input VAT, with the exception of blocked items such as certain entertainment services, and purchased, leased or rented motor vehicles that are available for personal use.
With the introduction of this new law, the government’s decision to impose VAT on artists and SMI is advantageous for the country as it will generate additional revenue. The promotion activities of artists and SMI’s is a good marketing strategy bringing in business and potential customers. The current VAT requirements will only enhance the economy and boost business.
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