With the evolution of social media, more businesses are shifting to online
platforms to promote their products and services. Since online purchase has become the new norm in our life, influencer marketing has also become one of the popular ways for businesses to promote their products and services. Businesses may promote their products through sponsored posts or by collaborating with influencers and placing advertisements on the channels of these influencers.
What does “Influencers” stand for?
Influencers are individuals who have a significant number of followers on their social media channels, typically utilizing platforms such as YouTube, Facebook, Instagram, TikTok, etc., to interact with their audiences. They earn advertising income through sponsored posts and generate income through other means such as brand collaborations, selling merchandise and channel memberships.
Tax Obligations of Influencers
Most people believe that influencers do not need to pay taxes since they are not running a traditional business. However, influencers are required to pay taxes on their earnings. According to Section 3 of the Income Tax Act, 1967 (ITA), income is subject to tax for each year of assessment (“YA”) if it is accrued in or is derived from Malaysia or is received in Malaysia from outside Malaysia. As an influencer, similar to other businesses or self-employed
individuals, all monetary and non-monetary payments received in exchange for services rendered must be declared for tax even if it is as a “passive” income.
You might wonder,
when should influencers file taxes?
The answer varies depending on the type of tax form you are completing. If the influencer’s work is similar to that of an employee, their income may be considered as
employment income and they shall file a return (Form BE) not later than 30 April of the following year. On the other hand, if the influencer’s work is more entrepreneurial in nature, involving managing their own schedule, their income may be considered as business income, and they shall file a return (Form B) not later than 30 June of the following year.
Are influencers entitled to claim deductions for those expenses incurred in the production of their gross income? What qualifies as deductible expenses for influencers?
As an influencer, you can only claim expenses as deductible expenses if you are a self-employed individual, and the expenses incurred are wholly and exclusively related to the production of the income. Some common deductible expenses include software licensing fees, home office expenses, marketing costs, travel expenses, clothing and beauty products, etc. However, it is important to
ensure that these expenses are business-related and can be supported with appropriate records and receipts.
