Federal Tax Authority (FTA) has issued a Tax Bulletin in relation to Individuals who make supplies in their personal capacity as who are known as artists which include performers, singers, dancers, stage artists, make-up artists, DJs, poets, song writers or any other individuals carrying out other activities or people who provide services like paid promotions on social media platform.
- Are these Artists and Social Media Influencers (SMIs) subjected to charge VAT for their services?
Yes, they are supposed to charge 5% VAT on the taxable services and if any costs associated in providing services to client can be recoverable too in the form of input tax credit if they are registered with FTA as a Tax Registrant.
- When should a Social Media Influencer get registered for VAT?
Mandatory registration: UAE-based Artists and SMIs who make taxable supplies (which include zero-rated supplies) in UAE are 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 AED 375,000 must get registered before they cross this amount.
Voluntary registration: 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 AED 187,500, they can get themselves registered on voluntary basis.
- What if you are an SMI but a non-resident and providing taxable supplies in UAE (place of supply being UAE)?
If the service recipient is not registered with VAT – If the services by non- resident SMI are in UAE then the SMI person is obligated to register with VAT and there is no threshold for getting registered if the recipient is not registered with.
If the recipient is registered with VAT – then SMI is not required to registered for VAT since the service recipient is obliged to account for VAT under the reverse charge mechanism.
- Should a VAT registered Artist or SMI issue tax invoice as per UAE VAT Laws?
Once registered, Artists and SMIs are required to issue tax invoices for all supplies that are subject to the standard rate. Where a supply made by an Artist or SMI is wholly zero-rated, and there are sufficient records to establish the particulars of that supply, a tax invoice is not required to be issued.
- What expenses can be recovered under Input Tax Recovery under VAT?
All the expenses which assisted taxable supplies are recovered in full except to entertainment costs, expenses relating to motor car which is used for business use that are available for personal use also and other personal expenses.
- What if SMI’s receive monetary and non-monetary goods as consideration are they still subjected to VAT.
- If they are monetary items like mobile etc. are received then these 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.
- If an Artist or SMI owns an event management company, and also provides its services separately on individual capacity, can VAT on the supplies made separately and independently be accounted for by the company?
No. The company should only account for VAT on the supplies made by the company.
- If an Artist or SMI has an agent that acts as an intermediary between the Artist or SMI and its clients in relation to the Artists or the SMI’s services, and the agent accounts for VAT, does the Artist or SMI have any VAT obligations as the principal?
The VAT obligations will depend on whether:
|The agent acts in the name of and on behalf of the Artist or SMI||The agent acts in its own name and contracts with the client on one hand and with the Artist or SMI on the other hand
|If an Artist or SMI contracts with a UAE-based company to provide advertising services outside the UAE, would such services attract VAT at 5%?|
|The Artist or SMI must account for VAT on the entire amount charged to the client and the agent must account for VAT on the fee or commission charged to the Artist or SMI.||The Artist or SMI must account for VAT on the amount charged to the agent and the agent must account for VAT on the amount charged to the client.||Yes, where a UAE-resident Artist or SMI is contracted by a UAE-based company to provide advertising services, the service would attract VAT at 5% even where the advertising service is performed outside the UAE.|
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