Dubai Influencers Respond To The New Tax Placed On Their Earnings

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Dubai Influencers Respond To The New Tax Placed On Their Earnings

“Sometimes brands and PR agencies send unsolicited gifts and invitations… Would those be counted towards our income?”

Lavina lsrani is a well-known food and travel blogger in Dubai. She’s a licensed influencer with 75k followers on Instagram and paid promotions are her bread and butter. She’s not surprised that a tax has been introduced on top earning influencers, but like many others we spoke to, she has questions.

This week the Federal Tax Authority announced an influencer tax on gifts and experiences. UAE influencers who earn more than AED375,000 annually are required to pay 5% VAT, and furthermore, any free gifts received should be declared as part of their income.

Influencers won’t be taxed unless you’re making over an average of AED31k a month

via GIPHY

One well-known fitness influencer with almost 150k Instagram followers is not bothered by the new law as it doesn’t affect him

I don’t earn anything at that threshold, it doesn’t affect me in any way. Unless I was doing more collaborations, as of now, the 5% tax isn’t an issue.

Another popular fashion account with around 500k Insta followers does paid posts as a side hustle, so again, this will not affect her income in any way.

It doesn’t effect me, (my income comes from other avenues) so the rare paid post doesn’t match anything like that.

via GIPHY

“It’s going to be hard to police”

You need to be earning approximately AED30k a month on average per year for the new ruling to affect your income.

AED30k into your bank account per month is the high end of the pay scale for the majority of influencers, (when you reach the big leagues, the most popular accounts can charge AED150k per post) however the grey area is what constitutes a gift and therefore what must be declared as income.

Those free Maldives are free no more.

Gifting, event invites and PR trips are standard in the media industry. There’s no fee and no contracts, however, the new ruling states, these benefits-in-kind should be declared. Any free products IN RETURN FOR SERVICES must be declared.

Unsolicited gifts and invitations do not need to be counted towards your income. However, if you use your platforms to promote the gift, you have then entered a transaction and the cost of the item should be declared.

The fashion influencer highlighted “this is for people in the big bracket, this is for the very big influencers”

 

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The UAE’s most popular Instagram accounts which can charge big bucks are the ones that will feel the pinch from the new rule

This new ruling will make people consider which freebies they accept and choose to support, and therefore adding more transparency to the relatively new industry, and Lovin readers support the regulation.

Read your thoughts on the new ruling here.

Crystal on Facebook said, “At least they will maybe be honest about the product they are marketing and consider what’s really worth it or not!”

Huda Beauty is the queen of UAE Instagram. One of the most followed beauty Instagram accounts IN THE WORLD, it’s been revealed that accounts at her level (she now has over 47 MILLION followers) can command over AED 121,000 PER POST. Huda responded to these claims back in 2017 – she keeps paid posts on her page to a minimum.

Only the biggest accounts will feel the pinch.

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