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Should Social Media Influencers Pay Income Tax?

- Advertisement -Should Social Media Influencers Pay Income Tax?

We are all part of the generation that indulges in social media one way or the other. Even If you don’t make use of social media directly, the indirect impact of its existence is still quite prominent. Statistics from dreamgrow.com, an online source of content marketing & social media information, shows there are 3.48 billion social media users in 2019 with a worldwide total growing by 288 million (9 %) since this time last year.

At the end of 2018, Facebook had 2.3 billion monthly users, with online adults aged 18-34 most likely to follow a brand. Match that with an influencer and it’s no wonder brands tend to choose social media instead of traditional media as their marketing options. The question then arises, should all these social media influencers (SMI) have to pay income tax? Because in actuality, they have taken over the role of advertisers for a lot of brands.
The current law states that those who earn more than RM5,000 a month from paid reviews, sponsored content, or online business via social media are subjected to pay income tax. Since these activities generate income, it has been classified as a profession and therefore, they will need to be taxed.

Inland Revenue Board (LHDN) Chief Executive Officer Datuk Seri Sabin Samitah said these online celebrities or influencers should visit LHDN’s office to seek advice on how to declare their earnings and calculate their taxes. “We can detect the individuals who fail to declare their earnings when the companies that hired them for their social media services declare their company’s revenue. By doing so, the companies will also disclose information about the ambassadors or vendors that they hired,” said Sabin.

Minors can’t escape this ruling as well, as according to the 1967 Income Tax Act, underage children who earn within the taxable bracket are subjected to paying income tax. Their parents are responsible in declaring their earnings on their behalf.

Now, a lot of SMI’s might be complaining about having to pay income tax, but this is actually a good move for multiple reasons. Firstly, it weeds out those that aren’t serious about their craft. Secondly, it doesn’t affect those that just do it as a side job and those who would like to start giving it a go. With the limit set at RM5000 a month, you need quite a fair bit of work or a big enough project to hit that number. Smaller SMIs wouldn’t really be affected by this unless they decided to go for it full time. Finally, since under LHDN it is considered a legitimate business model, you are allowed to claim for business expenses and tax refunds, which would help in the long run.

So if you’re an influencer or plan to be one, it’s best to head over to LHDN offices to find out how to get the application process going and how to go about calculating your income tax.

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