UAE Influencers Must Register to Pay Tax To Avoid 5 Years Prison Term

In the UAE, all influencers, regardless of their liability for the 9 percent corporate tax, are now mandated to register with the Federal Tax Authority (FTA). The introduction of the Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses established the country’s inaugural federal corporate tax regime, effective from June 1, 2023. Influencers earning AED375,000 or more annually from influencing activities are subject to the 9 percent corporate tax, but registration with the FTA is compulsory for all influencers.

This new requirement imposes additional administrative responsibilities on influencers’ businesses. Maroun Abou Harb, an associate at BSA Legal, emphasized that registration is obligatory for all influencers operating with the goal of generating profits in the UAE, even if they are not currently paying taxes. Influencers must obtain a Corporate Tax Registration Number (CTRN) through the EMARATAX platform.

As influencers are treated as businesses for tax purposes, they are required to file a Tax Return for each tax period, irrespective of their tax liability. Abou Harb suggested that while influencers with straightforward finances can manage tax filing independently, hiring an accountant is advisable due to the complexities of tax regulations and potential nuances in financial situations.

Tax evasion in the UAE, including by influencers, is actively monitored by tax authorities. Factors such as non-issuance of invoices, false input tax credits, and improper exemptions are scrutinized. Influencers engaged in tax evasion, such as not reporting or under-reporting income, may face up to five years in prison and fines up to three times the evaded tax amount. Additionally, businesses can incur hefty fines for tax evasion.

While taxing influencers is deemed a complex issue, Abou Harb argues that tax policies must adapt to the dynamic social media influencer industry. Adherence to UAE Corporate Tax rules is crucial to avoid penalties, which can be imposed for late registrations, missing declarations, improper record-keeping, and non-compliance with audit requests.

Read more: UAE Issues Visa Ban Warning Over Job Loss Insurance Fines.

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