VAT on UAE shows of Bollywood, Hollywood Celebrities ?
Celebrities often come to UAE to attend events on the request of residents and citizens and are paid for this gesture.
Be it education, banking or entertainment, services industry is huge. Where there is no delivery of goods, that is characterised as service industry. And the recent application of VAT in the UAE covered both the categories with few exemptions.
When it comes to entertainment, Dubai is second home to dozens of celebrities – especially from Bollywood – who come here frequently to perform in front of thousands of fans and also in private parties invited by individuals. This entertainment sector is subject to five per cent value-added tax (VAT).
But the question arises whether all those Bollywood and Hollywood celebrities will also be subject to new tax for their services – read performances – provided in the UAE.
When asked tax experts, they said, as per UAE laws, Bollywood and Hollywood stars who want to continue performing here in the UAE will have to register with the Federal Tax Authority to obtain Tax Registration Number in order to pay VAT if the invitee is not registered with FTA.
As per UAE law, Naveen Sharma, chairman, The Institute of Chartered Accountants of India (Dubai Chapter), says every person, who does not have a place of residence in the UAE or any GCC country and who is not already register, shall register mandatorily if he makes supplies of goods and services in the UAE, and where no other person is obligated to pay the due tax on these supplies in the UAE.
“If a person is not a resident in the UAE and is required to register in accordance with the provisions of the Decree-Law, the Authority shall register him with effect from the date on which he or she started making supplies in the UAE, or from such earlier date as agreed between the Authority and the person, whether or not person notifies the authority of the liability to register for tax.
“Considering the above legislation of the law, it can be interpreted that, a person who is a Bollywood or a Hollywood celebrity, and not a resident in the UAE, comes to perform any service in the UAE will have to register mandatorily in case no other person is obligated to pay the VAT on the services performed by them in the UAE,” Sharma said.
The celebrities would have to register in his or her name as an individual with the Tax Authority by submitting the required details online on the FTA portal, he added.
Most – if not all – of the Bollywood celebrities of modern era have performed in the UAE and continue to perform. Even Hollywood stars are also invited time and again to perform in the UAE.
A PricewaterhouseCoopers report had forecast that the UAE’s leisure and entertainment market potential would reach 45 million visitors by 2021, with international tourists accounting for 30 million, while residents and friends and relatives of residents total a further 15 million.
Dilip Jain, Principal – VAT, Nimai Management Consultants, noted that in cases of celebrities performing in UAE, the organising event companies who bring celebrities are likely to be registered for VAT and would pay tax on the amount paid to celebrities.
“Where the performance of such services exceeds or is likely to exceed the threshold limit of Dh375,000 in 12 months, and the payment is received from an unregistered persons, then the celebrities will have to register for a Tax Registration Number with Federal Tax Authority and pay VAT. They can also appoint a legal representative to register on their behalf.”
According to Shailesh Khandelwal, CEO and founder, Shailesh Khandelwal Accounting & Book Keeping Services, the UAE VAT law states that if the taxable person imports concerned goods or services for the purpose of his business, then he shall be accounting for due tax in respect of these supplies.
But if celebrities or other service providers offer services to unregistered or non taxable persons in the UAE, they need to register themselves in the UAE. Otherwise, this will result in contravention of the UAE VAT law.
“Celebrities often come to UAE to attend various personal events on the request of residents and citizens of UAE and are paid for this gesture.”
However, the mandatory and voluntary threshold limits of Dh375,000 and Dh187,500, respectively, for registration under UAE VAT law are not applicable to non-resident suppliers of goods and services. Thereby, all non-resident suppliers supplying goods or services, where article 48 is not attracted, have to register and need to comply with UAE VAT law provisions even if the value is less than the threshold limits, Khandelwal added.
More than 3,500 complaints on first day of VAT, says Economy Minister
There were 3,621 complaints to the Higher Committee of Consumer Protection on the first day of VAT implementation, according to the Ministry of Economy.
Two weeks later, daily complaints remained in the hundreds.
To address this, the committee is working to prevent any unjustifiable price hikes, said Sultan Al Mansoori, the Minister of Economy.
“The committee received growing calls from the consumers during the first days of the VAT application,” said Mr Al Mansoori at a recent Dubai meeting of the committee, according to state news agency Wam.
“People had some concerns but their worries have ebbed with the passage of time and by the end of the first fortnight of the application, the calls received by the committee declined from 3261 on the first day of the application to 493 on January 15.”
Most complaints concerned price hikes, tax registration numbers and erroneous calculations, said Khalid Ali Al Bustani, the director general of Federal Tax Authority.
“Traders and departments against whom the complaints were filed have been notified and were given a grace period to rectify their strategies as per the tax rules and condition,” said Mr Al Bustani, who attended the meeting.
Mohammed Al Shehhi, the undersecretary for economic affairs in the Ministry of Economy, said, “The committee is in constant follow-up of the market to prevent any violations and in case of any non-abidance, all legal measures have been taken against the offenders.”
Now check the Authenticity of your Tax Invoice through the New Online VAT Calculator
The Federal Tax Authority (FTA) on Tuesday launched a Tax Registration Number (TRN) verification service on its website, where consumers can check the authenticity of tax invoices and ensure that the merchants and service providers issuing them are registered with the FTA.
The Authority also debuted the VAT Calculator, which allows consumers and service recipients to instantly calculate the Value Added Tax (VAT) due on their purchases of goods or services. This, in turn, makes it possible for the public to remain aware of their rights and ensures full transparency.
Sarah Al-Habshi, director of Tax Compliance and Enforcement at the Federal Tax Authority, said that the new services were part of the Authority’s efforts to protect consumers and prevent any attempts at price manipulation as the UAE tax system goes into effect. These services support and facilitate the Authority’s efforts to monitor markets in collaboration with relevant authorities and stakeholders.
The TRN Verification service is fast, accurate and seamless, Al-Habshi explained, adding that consumers can enter the TRN found on their invoices on the “TRN Verification” section of the “Getting Help” tab on the FTA website, then, if the number is correct, the website will display the company’s name in English and Arabic. If the company is not registered in the tax system, the number entered will not yield results.
Al-Habshi went on to note that the VAT Calculator is designed to be easy to use, and will be available on the FTA website, under the “Getting Help” tab. Once accessed, the page displays a box where the price excluding VAT can be entered, upon which the calculator will display the total tax amount and the total price including VAT.
Users can alternatively enter the full price (including VAT), where the calculator would display the original pre-tax price, as well as the tax amount.
Levy of five percent VAT on e-shopping in UAE
|Online shopping will not be exempted from the Value Added Tax (VAT) levy which took effect on January 1, 2018 in the United Arab Emirates, Ittihad reported.
The UAE Federal Tax Authority (FTA) announced that a five per cent tax as VAT would be levied on e-shopping transactions, on equal footing with goods bought through conventional purchases at trading outlets across the country.
According to the FTA procedures, the 5% levy would be paid in the UAE on receiving the parcel purchased through the online medium.
The 5% VAT levy would also apply to all electronic websites whose overall online imports exceed the compulsory cap of AED 375,000 over the past 12 months or over the coming 30 days.
The regulations are in line with the Federal Law Decree 8 of 2017 on the Value Added Tax and its executive bylaw.