For the UAE’s freelance professionals — including all those social media influencers pulling in fat cheques — there could be a cost associated with the VAT. And no, it’s not confined to what they have to shell out for their next set of designer goods purchases.

If these individuals operating as a business make more than a certain threshold each year, the income generated from those transactions could come under the tax net, according to ad industry sources.

“Influencers may get the benefit of operating as an individual rather than as an incorporated business, even a single-employee enterprise,” said an advertiser. “Because if they are taking home anything over the defined limit, they will be treated as businesses.”

Under the VAT regime, “companies” with revenues between Dh1.87 million and Dh3.75 million will have the option to register for VAT during the first phase of the VAT implementation.

For the advertising industry, any ad placed on any platform is liable to a 5 per cent VAT. Market sources believe this will be on the net cost of advertising (minus the agency and early payment incentives) rather than on the gross ad amount as in Lebanon or Jordan.