UAE influencers threatened with jail for failing to pay taxes
To fulfil the registration requirement, Influencers need to obtain a Corporate Tax Registration Number (CTRN) through the EMARATAX platform, even though they are not required to pay the 9 per cent corporate tax.
Influencers are treated as commercial organisations for tax purposes as they conduct business by advertising goods or services. Through sponsored posts, brand deals and adverts, they generate revenue while creating content, negotiating contracts and handling financial affairs as befits a business.
Therefore, all Influencers, even exempted ones, are now required to file a tax return for each period, including all relevant supporting documents, within nine months of the end of the reporting period.
The UAE tax authorities are actively identifying tax evasion by looking into factors such as failure to submit invoices, false input tax credits, improper exemptions and falsification of export data.
In the context of influencers, tax evasion may consist of failure to report or underreport income earned from sponsored posts, brand endorsements, affiliate marketing, placement of undisclosed products, and failure to pay taxes on free gifts.
Those found guilty of tax evasion can face up to five years in prison and a fine of up to three times the amount evaded. Equally, large fines for tax evasion can be imposed on businesses.
Also, to avoid penalties, businesses or individuals must carefully comply with corporate tax rules.
Penalties also threaten those who fail to assist auditors or fail to provide Arabic-language documents to the authorities upon request.
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