Page 55 - Focus Group

Any consideration received by club for image rights to an individual team player would fall within the
in respect of employees will attract VAT at the definition of “remuneration” as an employee and
standard rate in the hands of the club. outside the scope of VAT.

The amount paid to a sports player to appear at an Secondly in case of self-employed player the
event or to participate in a competition, money is paid directly to the sports player as a
result winning the position in competition. Such
in his or her private capacity, will attract VAT at payments can be viewed as compensation in nature
standard in the hands of the player being a supplier.
and paid conditionally against winning and hence
Sponsorships outside the scope of VAT.
Sponsorships are offered to players in various Indemnity
forms, for example, vehicle, clothing, watches, If due to an injury to a player, an amount in the form
and travel etc. Such sponsorship received by an of compensation is paid to the injured player, either
individual sports person who is registered for VAT by the club to which the player belongs or by the
will attract VAT at standard rate.
offending party who causes the injury, then such
Sponsorship can also be arranged by a barter deal. compensation would not be considered against a
For example, a motor dealer provides player with the taxable supply by the sports players and would be
right to use a motor vehicle for a specified period, outside the scope of VAT.
in return of the advertising or promotional service There are lot of other types of income and benefits
offered by the player. In such barter transactions, such as bonuses, allowances and reimbursements
both parties must account for output tax for the etc., are earned by the players. VAT applicability
supply made to each other.
of each type of income should be carefully studied
Prize money and correct VAT treatment should be applied in
accordance with the UAE VAT Law.
Upon winning a tournament, the players are paid
the prize money by the tournament sponsor. The
sponsor awards the prize money to the winning
club and the club then distributes the money
amongst the players. The prize money received by
the club as consideration for services rendered to
the sponsor of the competition, then prize money
is deemed to be inclusive of VAT and the club must
account for output tax at the standard rate. Any part
of the prize money subsequently paid by the club CA Anil Chavda

Disclaimer:
This article and/or write ups and/or any of its content shall not be treated as opinion and/or advice in any circumstances of the author(s) and/ or the Chapter. Reader’s to apply their best
judgement in the best interest of their requirement and should seek a formal opinion on any issue.

The Institute of Chartered Accountants of India (Dubai) Chapter NPIO TAX JOURNAL 2020 55