Influencers could be evading the UAE’s tax regime by failing to declare free gifts and experiences.
The Federal Tax Authority issued a bulletin with advice to influencers and artists this week, reminding them they must pay 5 per cent VAT if they earn more than Dh375,000 annually.
Services that are subject to the tax include any paid promotional work, such as plugging a product, company or place online.
Physical appearances and access to influencers’ networks on social media are also taxable, it said.
When VAT was introduced influencers did not consider that they were doing business – even though some of them were making more than a government minister
However, they must also count the cost of any free products or experiences they receive in return for their services, the FTA said.
Experts called the rules “game-changing”.
They said it could herald the end of influencers accepting expensive holidays or gifts in return for promotion on their social media accounts.
“Holidays at some of these Maldives resorts cost up to Dh100,000,” Natasha Hatherall-Shawe, chief executive of Dubai marketing company Tishtash, who helps connect companies with influencers.
“And for unboxing, some people are getting Dh20,000 or even Dh50,000 of products a day.
“If this is the law, this is quite game changing.
“The implications are significant,” she said.
According to the bulletin goods that are received in return for services, such as phones, 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,” the Federal Tax Authority said.
“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.”
Legal experts said influencers must pay attention to this area, which is known in law as a “barter transaction”.
“I think that’s something that is easily forgotten,” said Bastiaan Moossdorff, senior VAT adviser at Baker & McKenzie Habib Al Mulla.
“If an influencer gets something in return, like free products, it will be considered a payment for services.
“So you kind of need to estimate or determine the value of the payment you receive and you should include that in your threshold calculation.
“It is not purely monetary. It’s also non-monetary and it is something that can easily be forgotten.”
Saleh Alobeidli, a partner and legal technology expert at ICLO law firm, said all influencers should invoice their clients before being paid for any work.
“When VAT was introduced influencers did not consider that they were doing business – even though some of them were making much more money than even a [government] minister," he said.
“They considered their activities as being very personal to them.
“However, today, if you do anything as an influencer, or as an artist, as long as you are making any promotion of any work and someone is paying you for what you are doing, all of this money is subject to VAT."
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The specs
Engine: 3.0-litre six-cylinder turbo
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Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
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Benefits of first-time home buyers' scheme
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Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
Karwaan
Producer: Ronnie Screwvala
Director: Akarsh Khurana
Starring: Irrfan Khan, Dulquer Salmaan, Mithila Palkar
Rating: 4/5
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Scorebox
Dubai Hurricanes 31 Dubai Sports City Eagles 22
Hurricanes
Tries: Finck, Powell, Jordan, Roderick, Heathcote
Cons: Tredray 2, Powell
Eagles
Tries: O’Driscoll 2, Ives
Cons: Carey 2
Pens: Carey
