THINGS DIGITAL MEDIA EXPERTS SHOULD KNOW ABOUT ACCOUNTING AND VAT IN UAE

Being an accounting and VAT consultant in UAE over past few years, we have got change to work with clients in digital media segment. We have helped them with their accounting and UAE vat returns. These businesses engage in SEO, digital marketing, content creation, public relation, branding and advisement for clients.  These sounds simple as a business if we talk from an accounting perspective.

However, we felt it is worth talking about few points which digital media businesses should keep in mind:

1. Client Money or Reimbursement: 

Often digital media businesses receives money from their clients for payment to various networks (such as Facebook, Google, LinkedIn, etc.) on their behalf.  The businesses should keep this money separate and marked in accounts as client’s liabilities towards these vendors. They should not mixed up this money with the fee charged to their clients by digital media businesses.

In our experience, mix up of client money and fee money often causes dispute. In extreme cases, it leads to severance of business relation between digital media businesses and their clients.

2. Using Freelancer for specific task: 

Many digital media business uses freelance staff to carry out specific task for lack of available technical staff. 

In UAE, while it is permitted to use staff on free-lance basis, there are clear guidelines on using people with valid work document issued by appropriate local authorities and valid license to provide you with invoice.

3. VAT Rules: 

VAT impacts all businesses in the UAE. However, there are some specific areas which needs attention for businesses engaged in digital media:

  • Disbursements: While the digital media fee income requires levy of applicable VAT, invoices issued by vendors to client are pass through as a disbursement. They are not subject to VAT in most of the cases.
  • Buying Online Media items: Digital media businesses often incur expenses abroad for various purposes like buying images, advertisements, etc.  In most of the cases, these vendors are unregistered in the UAE and this requires application of reverse charge by the digital media businesses. 
  • Client outside UAE: Many a time UAE digital media business serves foreign clients for various campaigns.  It is important to note that invoices to foreign customers are subject to VAT at Zero rate. The invoices here should comply with VAT rules of UAE. Also while you file your UAE vat returns, it is important to appropriately enter these invoices.

We hope these points are useful to digital media business owners in their ongoing business decision.  Please also note, though we are specifically addressing digital media business here in this article, the principals would apply to many other service businesses. We would be explaining this in our upcoming blogs. 

Accountant’s Box is accounting and VAT consultant in UAE. We can assist you in registering your company for VAT in the UAE. Our dedicated team will provide all necessary guidance on VAT registration and take care of the whole registration process. For information, you could reach us at info@accountantsbox.com.