The South African Revenue Service has officially introduced a new type of tax for social media influencers, further enhancing its segmentation model to encompass new industries in the country. This is in recognition of online platforms as a means of income for more and more individuals who advertise products, services, and brands to their social media followers.
Social media influencers earn through paid collaborations, affiliate marketing, sponsored posts, and exchange payment in the shape of products or a vacation. SARS has ensured that all such revenues fall under the scope of taxable income and will need to be disclosed in full. The agency confirmed that “full voluntary disclosure is critical” and warned the influencers that they must disclose all forms of revenue received.
SARS Commissioner Edward Kieswetter indicated that influencers and all taxpayers have to keep pace with the tax regulations.
“I am reminding social influencers to hold their end of the bargain,” he said.
He further said that the revenue authority will assist with targeted education, guide documents, and outreach programs.
See also: South Africa set to regulate content of financial influencers to protect consumers
How the social media influencers tax will apply
SARS classifies taxpayers into given groups so that it can provide tailored services to different groups. It did the same for three additional groups in August: social media influencers, gig economy workers, and national and provincial government departments.
Social media influencers have been regarded as “new entrepreneurs.” They will be taxed as independent contractors or sole proprietors and will be taxed according to prevailing income-tax bands. They could even be provisional taxpayers depending on the nature and size of the income in certain cases.
The agency clarified that the funds earned from cash payments, sponsored content partnerships, affiliate links, product placements, and services performed for visibility must be disclosed. The rules placed influencer income on par with income reported by other businesses and solo practitioners.
To stay within the guidelines, SARS reported it will continue to utilise third-party information to check taxpayer returns. This will help place taxpayers in the right income tax brackets and report all income. Influencer compensation, the agency reported, will not be isolated from other forms of compensation.
Besides that, SARS has also created products, videos, guides, and scheduled webinars so that influencers can comply without trouble. As much as influencer marketing is a departure from customary advertising, SARS clarified that the underlying principle of taxation is not immune, i.e., revenues earned must be reported and paid tax on.
A part of a broader tax strategy
The inclusion of the influencer segment is designed as part of SARS’ broader strategy to build tax compliance in emerging and new segments of the economy. Freelancers, independent contractors, and those in the gig economy were also included in the segmentation model formally, reflecting the revenue authority’s attempt to stay current with modern ways of working and entrepreneurialism.
The enhanced model of segmentation currently includes ordinary taxpayers with one income, high-income individuals, large and foreign enterprises, estates, practitioners, public benefit organisations, employers, the state, and the new segments that were added in August. SARS referred to the framework as instrumental to achieving certainty among taxpayers and achieving equity in revenue accrual.
The agency continued to note that the influencer economy is a colossal shift in promotion and marketing in the digital age. The legacy ad is increasingly augmented by people leveraging personal brands and audiences on channels like Instagram, YouTube, TikTok, and X (formerly known as Twitter). SARS noted that responding to taxation policy so that such shifts adequately tax revenue from new economic activity is imperative.
Commissioner Kieswetter was insistent that SARS’s legislative role is to bring in all the revenue due to the state, enforce compliance, and enable legitimate trade. He said outreach, education, and targeted engagement will be key to helping influencers understand their role and get it done on time. With the emergence of the influencer category, SARS has positioned itself to deal with the advancement in technology and the speed of online business.
The regulations provide a clear direction on how to approach influencer income and eliminate uncertainty on what to disclose. The new regulations involve all South African influencers who earn income, by way of money directly, or brand sponsorship, affiliate commission, or in-kind payments, declaring it for tax. With its extended taxpayer segmentation model, SARS has put social media creators into the tax net of the country so that their incomes are taxed no differently than any other business or professional income.