Declare sponsored items, bloggers told by Iras

Iras reminds them non-monetary benefits in kind may be taxable, sparking some protests

Popular bloggers Wendy Cheng (left) and Naomi Neo. PHOTOS: ST FILE, THE NEW PAPER

Sponsored trips to Hong Kong Disneyland, an invitation to family and friends for a meal tasting session or a package of the latest beauty items.

These are some of the products or services that bloggers or "social media influencers" often receive from companies keen for them to spread the word about their products.

Now the taxman has come knocking on their doors to remind them that such "non-monetary benefits in kind" must be declared as part of their income by next month.

"Sponsorships of products or services received in return for writing or reviewing the sponsors' products may be taxable and must be declared," the Inland Revenue Authority of Singapore (Iras) wrote in a letter to bloggers earlier this month.

But some are protesting that they had no inkling of this requirement.

Popular blogger Wendy Cheng, also known as Xiaxue, said: "It may be hard to put a value on certain things. If someone sends me a lipstick, am I supposed to go find out how much it costs and declare it?"

Ms Cheng said her social media agency often receives products that it did not ask for nor has a need for, and it would be unfair to be expected to pay tax on them.

According to Iras, such requirements are similar to that for other self-employed people and have "always been around".

For instance, if a person's family or friends are invited to a meal for four people, the writer or reviewer will have to declare its market value under taxable income.

However, bloggers can claim these expenses if they are incurred in the course of earning an income.

For instance, Iras said the lipstick received by a reviewer would be taxed if it is the only form of payment received for the article that she writes. But if she is paid for the article, it would not be taxed.

  • What's taxable? Taxman replies

  • The tax agency has a list of guidelines specific to bloggers and social media marketers. Here are some common questions the authority addressed:

    Q If the influencer works full time as a salaried employee and part time as a social media influencer such as a blogger/YouTuber, etc, will the income earned on a part-time basis be subject to tax?

    A Yes. The income they received from social media marketing activities will be considered self-employed income once it is confirmed that they are carrying on a trade or business.

    Q If influencers did not sign any contract prior to reviewing or promoting a product or service, is the monetary or non-monetary payment still taxable?

    A As long as the payments are made in relation to their social media marketing activities, whether they are under contract or not, such payments are taxable.

    Q Are the products or services provided to influencers' family or friends taxable?

    A Yes. If influencers and their family/friends are invited to a meal for four persons, they have to declare the market value of the meal for four persons, and not just their portion of the meal. The full value of the meal for four persons will be assessed in the influencer's name.

She also cannot claim expenses for the lipstick in this instance. Only things like accounting and administrative fees or advertisement costs are considered expenses.

"The market value of the product or service should not be the taxable amount," said a spokesman for Gushcloud, an influencer marketing and media company. "What would be more accurate and less subjective is the market value of the service the influencer provides in exchange for the in-kind payment, should they accept it."

Same tax rules apply to other workers: Iras

Ms Yang Huiwen, regional director of social media company Netccentric, said it was not aware of the clause until yesterday. "Taxing according to a person's service rates would not work in some cases as some bloggers charge high fees but would be willing to barter their services for a product they like."

Some bloggers also said that if non-monetary benefits are taxable, the same norms should apply to journalists, freelance writers, travel hosts and other people who receive free gifts for work.

Iras said the same standards apply to any self-employed people. But non-monetary benefits are not taxable for staff working in a media company, for instance, if they represent the company.

Accountants said the taxable value of the goods and services is determined by how much they are sold for on the open market. If they are not for sale, the taxpayer may report the value of a similar item but that may be subjective.

Ms Wu Soo Mee, partner at Ernst & Young Solutions LLP, called for "more clarity" from Iras, while tax partner Jill Lim of Deloitte Singapore said: "Iras may wish to consider introducing a tax-exemption threshold for certain non-monetary benefits that may be received by the bloggers, so as to reduce the administrative burden of tracking or declaring all benefits received."

Non-declaration or inaccurate declaration of income is an offence. Iras can impose penalties of at least 200 per cent of the tax underpaid for such cases or up to 400 per cent of the tax underpaid for tax avoidance or fraud cases.

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A version of this article appeared in the print edition of The Straits Times on March 17, 2016, with the headline Declare sponsored items, bloggers told by Iras. Subscribe