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Gifts now come with a price

Is it fair for bloggers to declare sponsored items as part of their personal income?

Megan Low


Published: 24 March 2016, 3:55 PM

Ever felt envious of the bloggers and social media influencers who are always receiving free meals or luxurious beauty products, just so they can post a picture of them on Instagram?

By next month, these influencers will have to pay taxes for their sponsored holidays, meals, and even clothing.

What’s going on?

Earlier this month, the Inland Revenue Authority of Singapore (IRAS) wrote to several bloggers reminding them that “non-monetary benefits in kind” may be taxable.

In their letter to popular local bloggers like Xiaxue and Naomi Neo, IRAS wrote: “Sponsorships of products or services received in return for writing or reviewing the sponsors’ products may be taxable and must be declared.”

Usually, companies send bloggers and influencers free products or services as a way to market their goods. In return, these influencers advertise their products by reviewing them in their blogs or social media channels.

 

Social influencers usually post on social media to advertise new products.
Photo credit: Instagram.com/Naomineo

 

However, after IRAS announced that these items are part of bloggers’ taxable incomes, this has led to a few protests, notably by Xiaxue.

Xiaxue, otherwise known as Wendy Cheng, 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?”

On one hand, some thought that it is fair to tax bloggers, since the gifts that they receive can have high market values.

 

Some netizens felt that those who are against the taxation do not realise the amount of high-value items bloggers receive.

 

International Baccaulaureate graduate Julia Yeo, 18, said: “Even though these bloggers are not paid with currency, the goods and services they receive – especially expensive meals and overseas trips – will increase their disposable income. So, they can buy other things with the money that they would otherwise have spent on food or holidays if it weren’t provided for them, so I feel it is fair.”

“Perhaps, the government could set a minimum value for goods that should be taxable, because I don’t think the main concern is on small things like lipstick,” she added.

On the other hand, some felt differently, for a number of reasons. For example, it may be challenging to determine the market value of the goods they receive.

 

A netizen tries to explain the possible flaws in the system when influencers are taxed.
Photo credit: Facebook.com/Thestraitstimes

 

Aside from that, influencers also work in a way that does not require a lot of monetary transactions. Although bloggers do get paid for doing advertorials, there are times where the blogger simply receives a good, and in return provides a service by posting on social media. As such, currency is rarely used in these proceedings.

Thus, some felt that imposing monetary taxation on bloggers may be ineffective and unfair as they have to find alternative means to pay for these taxes. This may be difficult if the majority of someone’s income comes from sponsored goods.

Ian Choo, 18, who is currently waiting to attend university, said: “Asking bloggers to declare sponsored items as personal income is easier said than done, and can become a very tedious process. Bloggers do not control what they receive, so the first problem is determining which products to consider part of their personal income. This is subjective, and I feel that it might lead to a lot of errors when calculating the amount to tax.”

What’s your take?

  1. Do you consider sponsored goods as part of a social influencer’s income?
  2. Should social influencers be taxed for the sponsored items they receive? Why?

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