VAT Application of Digital Marketing Services in Dubai

VAT Application of Digital Marketing Services in Dubai

All tax-registered companies in Dubai, UAE are obligated to pay VAT (Value Added Tax) to the government at a rate of five percent on the taxable supplies at each step of the supply chain, be it goods or even services. Read to know more about the VAT Application of Digital Marketing Services in Dubai.


The United Arab Emirates was well-known for being a tax-free nation, but on the first of January, 2018, it brought into existence the “VAT system” as its new source of income. The country’s decision to implement VAT across the nation was taken due to its effort towards accomplishing its vision to continue high-quality public services and lessening economic dependence on limited revenue sources such as fines, tourism, oil, and other hydrocarbons.

Digital Marketing Business in Dubai, UAE

When the COVID-19 pandemic hit us, it was really difficult so we had to find new and safer ways to continue our livelihoods. But, it seems as if there is no end to this pandemic. And people have learned to live with the flow of the pandemic waves. We have already embarked on the journey of digital marketing.


As the world started going digital, digital marketing has become the need of the hour. Connecting organizations and their customers online, digital marketing has become a necessity, no matter what kind of industry they belong to or what kind of products or services they offer to the public. You might already be finding the products you intend to buy whenever you go online. This is one of the many magic tricks of digital marketing.


Digital Services to pay VAT in UAE


There is certainly no business today that is not subject to the benefits of digital marketing. It has become an important part of every business today. Achievement of business goals seems next to impossible without digital marketing to most business organizations. It is no wonder why more and more entrepreneurs are planning to open a digital marketing agency to offer all kinds of professional services from Email Marketing, Digital Media Buying, SEO, Campaign Development, Content Development, Marketing, and Blogger Outreach Programs.


When it comes to VAT, all sorts of digital services that are used and enjoyed in the United Arab Emirates are levied 5% of VAT, like some of the activities listed below:

  •     Online Gaming
  •     Apps
  •     Streaming or downloading media (including music and video)
  •     Advertising
  •     Cloud storage and software

 However, there is no VAT registration threshold for non-resident providers of digital services. They are required to register with the Federal Tax Authority. For the complex VAT registration process in Dubai, businesses have to comply with the rules and regulations and the regular VAT number application process. If it’s a foreign business, they will need a local tax agent to represent the business and file returns. [MOU1] 

 Value-Added Tax (VAT) in Digital Marketing Businesses

VAT in the United Arab Emirates is a hot-button issue that digital marketing companies need to be aware of. There are innumerable rules and regulations when it comes to Value Added Tax (VAT) in Dubai, UAE, and how a digital marketing company can charge its customers totally depends on various facets. This also includes whether a customer is another business or a private consumer.


All the business establishments registered with the UAE VAT system must pay special heed to compliance with the provisions of the VAT law related to digital services in the United Arab Emirates. The VAT journey of digital marketing businesses in the region is smooth until they come across some obstacles in the form of:


  •     Quality of services provided and the performance
  •     Location of service provider and consumer receiving the service
  •     Invoicing of products and services billed and supplied by a third-party business organization.


Importance of Value-Added Tax (VAT) Compliance in UAE


Not every business has to charge taxes from their customers, and digital marketing businesses do not belong to this group. Regardless of whatever industry, if you are the owner of a taxable business in Dubai, UAE, you have to comply with the rules and regulations as any kind of non-compliance towards VAT regulations may result in heavy fines.


If you would like to steer clear of unnecessary fines for VAT non-compliance and continue your business without any difficulties, you must remain up to date with all the VAT law provisions. You can also get the help of outsourced accountants in Dubai to stay updated with VAT law provisions and ensure compliance at every step. 

Impact of Value-Added Tax (VAT) on Digital Marketing Entities


Digital marketing companies in the UAE are required to assess the impact of Value Added Tax (VAT) on business transactions when engaging with external entities or clients. When assessing the impact of VAT on the organizations rendering digital marketing services in the UAE, it is important to take into account the location and type of supply of the services that are to be offered to the clients. 

If a marketing business in the city furnishes both offline and online advertising services, then the impact of the tax in the case of offline advertising will solely depend on the location while the VAT impact for online advertising depends on the requirements that are to be held fast by the marketing businesses in accordance with the provisions concerned with the marketing services in the United Arab Emirates.

VAT Registration


First and foremost, digital marketing businesses in the UAE must ensure that their financial records are au contour and studied up to the hilt to know if they are eligible for VAT registration. They should register their business for VAT the moment they surpass the minimum mandatory threshold, which means if their taxable supplies exceed AED 375,000. However, if they reach the voluntary registration threshold of AED 187,500, they can choose to do as they wish. 

VAT-registered digital marketing businesses have to:


  •     Charge VAT on their taxable supplies or imports
  •     Reclaim the VAT they paid on business-related products or services
  •     Notify the VAT they have charged and the amount of VAT paid


A&A Associate, one of the top business setup consultants in Dubai, UAE, is one of the best VAT service providers in the UAE. Whether your business is in its initial phase or you are planning to scale your business to higher positions, our qualified and professional consultants can help you soar.


Also, read how business setup consultants in Dubai can help your business.


Contact us today and take the advantage of our expertise.


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