Is VAT charged on marketing services supplied to a foreign company?

Article (25) Page 9 of 26 26 من9 صفحة Tax Rate 1. Tax shall be applied at the standard rate of 5% of the value of the Supply or the value of Imports, unless this Agreement provides for an exemption or the zero-rate on such supplies. 2. Without prejudice to the obligations provided for under this Agreement and the Local Laws, published prices in the local market for Goods and Services must include VAT.

BASIC TAX INFORMATION BULLETIN 6. Specific issues for Artists and SMIs a. Are non-resident Artists and SMIs who act in their personal capacity liable to register for VAT in the UAE? Where a non-resident Artist or SMI contractually 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 the recipient is obliged to account 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. b. Are goods provided to Artists and SMIs in exchange for their services subject to VAT? Where an Artist or SMI receives goods (such as a phone) 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. c. What are the VAT obligations of a registered Artist or SMI? A VAT registered Artist or SMI is required to comply with all the obligations in accordance with the VAT and Tax Procedures legislations; including but not limited to submission of periodic VAT returns, issuance of tax invoices, etc. d. What are the implications if a VAT registered Artist or SMI does not charge any consideration for the services? Where a VAT registered Artist or SMI does not charge any consideration for its services, it should consider the provisions related to deemed supplies and account for VAT if the supply falls within the meaning of a deemed supply. This is to be considered on the basis of the facts on a case-by-case basis. e. If an Artist or SMI owns an event management company, and also provides its services separately and independently, 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. Even where an individual holds 100% shares in a company, the individual is considered distinct from the company and is responsible to account for VAT only on the supplies made in his personal capacity. f. 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 Artist’s 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: (i) the agent acts in the name of and on behalf of the Artist or SMI; or (ii) 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. The agent acts in the name of and on behalf of the Artist or SMI: 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 agent acts in its own name and contracts with the client on one hand and with the Artist or SMI on the other hand: 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. g. 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%? 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. For example, if a UAE based company, which owns a hotel outside the UAE, contracts with a UAE-resident Artist or SMI to visit the hotel and post pictures on social media with a view to promote the hotel, the supply made by the SMI will be subject to VAT at 5%.