Corporate Tax and VAT considerations for influencers in the UAE

The UAE's influencer scene is exploding. Value Added Tax and Corporate Tax significantly impact how influencers earn and operate. The UAE's tax rates remain competitive globally, with 9 per cent Corporate Tax and 5 per cent Value Added Tax. These lower rates contribute to the UAE's appeal to the growing influencer industry. This guide delves into the complexities, offering insights to help understand and navigate tax obligations. 

VAT

The UAE's VAT regulations apply to influencers once their taxable supplies exceed Dh375,000 annually, encompassing direct payments for promotional services and the value of goods or services received through barter arrangements. VAT registration is mandatory upon surpassing this threshold. Larger brands often require their suppliers to possess a valid VAT registration certificate before engaging them.

If the influencer fails to register for VAT upon surpassing the threshold, they are responsible for paying 5 per cent VAT themselves. The influencer may be able to claim input tax (VAT paid on certain business expenses) to offset their VAT liability.

When an influencer promotes a brand for a UAE-based company, the transaction is subject to VAT at 5 per cent. However, if the brand is located outside the UAE, the service may be generally zero-rated. If the foreign brand has any presence in the UAE (e.g., showroom), the influencer must charge 5 per cent VAT. 

Additionally, if the influencer's services fall under categories like "cultural," "artistic," "sporting," or "educational" (e.g., educational influencer conducting online courses), VAT applies at 5 per cent, regardless of the brand's location.

When payment is received in the form of goods or services (barter), the influencer must account for VAT on the market value of the items received. Here too, VAT generally depends on the brand's location: 0 per cent for businesses outside the UAE and 5 per cent for those within.

VAT on electronic services, i.e., advertising space on social media platforms, or revenue from platforms like YouTube, may be out of scope if the brand or customer is based outside the UAE and has no physical presence within the country. Specific VAT treatment varies on factors such as the location of the audience, the platform's operations within the UAE, and the nature of the service.

Corporate tax

Influencers operating under a Limited Liability Company (LLC) must register for corporate tax. If their taxable income surpasses Dh375,000, they are subject to a 9 per cent corporate tax. LLCs with an annual turnover below Dh3 million may qualify for Small Business Relief, exempting them from paying any corporate tax.   

Influencers operating as sole proprietorships must register for corporate tax if their turnover exceeds Dh1,000,000 annually. They too are subject to 9% tax rate on taxable income exceeding Dh375,000. Here too, Small Business Relief is available.

Navigating the tax landscape for influencers in the UAE requires careful planning and a proactive approach. While the UAE offers competitive tax rates, it is crucial to understand its implications for each business model.