What are the tax and VAT rules for influencers in Dubai?

The attractions of Dubai as a tourist destination are easy to see - all year round sun, sea, safety, luxury hotels and a smart crowd. Instagram influencers love the city for its glamorous vistas. But apart from providing an attractive Instagram profile, what is the appeal?

Dubai is a growing hub of social media influencers from around the world. Providing they have the right work visa, Dubai offers influencers complete tax-freedom, allowing them to keep all of the profit they earn from their activities.

All year round sun and tax free? What's not to like?! :)

At Capture Accounting, we help many YouTube, Tik Tok  and Instagram influencers make the move to UAE.

If the idea has captured your imagination, please apply for a call to see if we can help.

Do influencers get taxed in Dubai?

As with most things in tax - the answer is it depends! At present (2022) there is no income tax in Dubai, meaning that you don't pay tax on any income you earn in Dubai.

Contrast that to the UK, where you pay tax on your worldwide income whilst you are a UK resident.

That's why making yourself non resident in the UK and resident in Dubai means that you can escape UK taxes and be subject to UAE tax - which is currently non existent.

That said, they are introducing tax for companies in the UAE from June 2023, although the rate will be much lower than anywhere else in the world and rumoured to be around 9%.

At present there is no mention of income tax being introduced in the UAE, so any income you earn - even from the company you set up - can be tax free if set up correctly.

Tax advantages of living in Dubai

Living and running your business in Dubai has many advantages - aside from all year round sun, pristine beaches, amazing service and complete safety, you also benefit from being able to keep more of your hard earned income because there's no tax in Dubai!

Compare that to potential total taxes in the UK of nearly 50%, it makes it a strong proposition to relocate.

Not to mention the growing community of creators and social media influencers that have made Dubai their home, which make for a smooth transition to life in the Middle East.

Will this impact my taxes in the UK?

As a UK national registered for tax, you must declare to HMRC that you are becoming a non-resident.

There are certain rules you need to follow to make sure that you are actually non-resident for tax purposes including how many days you spend in the country, the number of ties you have here and the permanency of your residence abroad.

Falling foul of any of these would exempt you from your non-residence tax status, and you may have to pay tax in the UK anyway.

We recommend keeping your UK company going and maintaining your income sources through the UK, as there is always a risk that the UAE may change rules or rescind your Visa.

We can then advise you on the VAT impact and how to move your money to UAE in order to benefit from tax deductions.

What do influencers in Dubai have to declare to the federal tax authority?

The rules in Dubai are changing all the time.

Whilst in the past some may have used the UAE as a way to evade tax completely (tax evasion is illegal - avoidance is legal), that is no longer able to be the case.

In an attempt to get closer to the International community and put itself on the map, the UAE has also been forced to share information with other tax authorities - including HMRC.

In recent times it also introduced VAT for the first time, which is something you need to consider if you are going to be trading with customers inside in the UAE.

They have announced that corporation tax is going to be introduced albeit at a much lower rate than most other countries including the UK.

Whilst it will be still be tax advantageous to relocate and run your business from UK, you need to ensure you are complying with all the local regulations and rules surrounding non-residence from a UK perspective.

Given that the tax authorities of the UK and UAE are talking to each other, it becomes even more important to make sure you get the right advice - not just on set up but also on an ongoing basis given that things are changing all the time.

At present there are no accounts or tax return filing requirements in the UAE (apart from VAT filing), but it will soon be introduced once the corporation tax laws have been enacted.

VAT tax treatment in Dubai

VAT is a complicated area for anyone!

Thankfully when the UAE brought in VAT they modelled the system based on the UK VAT laws, so a lot of the rules are similar.

We're familiar with the VAT obligations for services that you would provide as social media influencers and how to deal with - for example sponsorships, product sales, receiving income from Ad sense and so on.

As long as you are not dealing with UAE customers, then most of your income should be exempt from VAT in the UK. Again it's important to take advice on this in order not to fall foul of the rules and suffer from serious penalties - which the UAE don't hesitate to levy!

Conclusion

Social media influencers move to Dubai for the great lifestyle and to provide an enticing backdrop for their social media platform.

But the main reason influencers move to Dubai is to benefit from zero tax and make more money.

If you don't have many ties to London or the UK, you can work anywhere in the world, so relocating to Dubai is a serious option to consider given the tax benefits.

However, there are many rules around tax residence that are easy to get wrong, so it pays to talk to a specialist accountant who understands your business and is an expert on non-residence for tax services.

Contact Capture Accounting about moving your influencer business to Dubai

Capture Accounting deal with many social media influencers thinking of moving to the United Arab Emirates.

If this sounds like something you would like to do, then you can book a short consultation. Click now, for a chat.