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5% VAT Now Implemented on Facebook Ads in UAE

Social networking site, Facebook, recently made an announcement in its platform that all ads in UAE will be subject to value added tax of five (5) per cent.

This means all entities and individuals that are looking to promote on the platform are required to factor in the additional cost for VAT on advertisements. This move by the social media giant follows VAT implementation in UAE which was initiated on the 1st of January, 2019.

Meanwhile, the platform sent all UAE Facebook users a notice regarding the charging of VAT.

“Because of the implementation of value added tax in the United Arab Emirates, the platform is required to bill VAT on all sales of UAE ads. All advertisers that have a “sold to” of the UAE that hasn’t submitted their tax registration number (TRN) will be charged 5 per cent VAT on advertising services.

How to add your TRN to your Facebook account

  1. Click Account Settings
  2. Confirm or add your state
  3. Input your tax registration number (15 digits issued following VAT registration)

It is necessary to input the tax registration number that was issued by the Federal Tax Authority (FTA) in the UAE. Facebook is legally required to undergo a verification process for the submitted TRNs with the tax authority. Those that have submitted invalid TRNs will be disregarded. As a result, they will be charged the current VAT rate on all purchases of ad services.

In order for a business to continue using ads on Facebook, the account settings must be updated with the actual business name, TRN, along with a detailed address with the business country and state.

Take note that entering the tax registration number is not mandatory. But, if the business is VAT registered and the TRN is provided, the social media platform won’t charge 5% VAT.

VAT is added for every bill for ads, whether the purchase on Facebook is for personal or business purposes. For those that settle Facebook ads payments using the manual payment method, the current tax rate will be applied as soon as the account for ads is funded.

How to check VAT charges added to Facebook ads Receipts

You can view how much you have been charged for VAT by referencing ad receipts which are in the section, Billing, in the Ads Manager.

In order to manage billing information and also check ad receipts, the user must be the admin of an ad account.

Is VAT included in the daily budget that is set for a campaign?

A daily budget will not include the tax that will be charged for ad purchases. For entities in UAE that are subject to VAT, the total amount in ads purchases will exceed the daily budget set when it is added with the charge for VAT.

If you require additional information, we suggest you visit the ‘help content’ of Facebook. As for concerns regarding VAT in UAE, consult with a VAT specialist.

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions.