Social media influencers or influencers are a career that has only existed for about 15 years, starting with the era of bloggers and then vloggers before that in various forms on various social media. Many want to make influencers a career because they are addicted to the beautiful dream of receiving high pay with seemingly easy work.
With everyone now wanting to be an influencer, the Inland Revenue Board (LHDN) has published detailed guidelines on taxes that social media influencers must pay. Two years ago, LHDN confirmed that the tax payment rate among influencers in Malaysia is still low.
First of all, influencers are recognized as a professional career and are divided into two categories, namely individual influencers and object-based influencers. Individual influencers are anyone such as artists, sportsmen, professionals, or housewives who use social media to influence followers.
Object-based influencers are like animated characters (such as Mechamato), movie characters, or mascots who have their own social media accounts that generate income. This also applies to artificial intelligence (AI)-generated virtual influencers who are now increasingly popular as product ambassadors.
The income that needs to be declared for negligence is platform fees such as those received on YouTube or Google AdSense. Influencers will also need to declare payments for promoting products or paid reviews, including payments in non-cash forms such as sponsored items, free services, vouchers, or discounts received in lieu of ringgit.
Proceeds from the sale of physical and digital products as well as the sale of social media accounts will also be subject to tax. In addition, payments for appearances at events, character royalties, or being a judge/participant in programs must also be declared by influencers to the IRB.
Influencers are however eligible to receive tax deductions for expenses used to generate income such as for publication-related costs such as internet fees and production crews. As with other taxes, all income and expense documents must be kept for seven (7) years for audit purposes.
With these detailed guidelines, influencers can no longer use the excuse of not knowing, being unclear or finding loopholes to avoid paying income tax.
