Social media influencers must declare all their sources of income, the South African Revenue Service (SARS) said in a statement last week in which it clarified its approach towards taxing this category of taxpayer.
SARS said it has a mandate to collect all revenue due to the state, improve tax compliance, and facilitate legitimate trade. SARS delivers this mandate through its strategic intent to develop and administer a tax and customs system based on voluntary compliance.
SARS organises its operations into segments to better serve diverse taxpayer needs. The revenue authority recognises standard taxpayers, large and international businesses, high-wealth individuals, public benefit organisations, prominent and related entities, estates, tax practitioners, and employers. The latest additions to this segmentation model are national and provincial government, social influencers, and the gig economy.
The inclusion of social influencers as a distinct segment recognises them as modern entrepreneurs who operate as sole proprietors or independent contractors, leveraging their technological savvy and social following to provide offerings in the market.
SARS acknowledges the evolving landscape of marketing, noting that traditional campaigns are increasingly digitizing through smart technologies.
“SARS is generally finding that most marketing budgets are contracting social personalities to lend their image to digital platforms. This is a shift away from established marketing houses towards individuals with a sizeable following,” the statement explains.
As marketing spend shifts in response to these changes, SARS is adapting its educational and compliance initiatives to address the digitization and economic activities that have transformed the world of work, including the gig and sharing economy.
Social influencers are typically individuals with substantial online followings who monetize their reach through partnerships with brands, creating sponsored content, or promoting products and services. SARS views these activities as constituting work similar to freelancing or contract employment. As such, influencers are subject to income tax based on current brackets outlined in the Income Tax Act (ITA).
When managing this segment, SARS will handle each such situation on a case-by-case basis according to the current income-tax brackets. Some of these cases may fall into the provisional-taxpayer category.
What must be declared
A core aspect of SARS’s clarification is the requirement for social influencers to declare all income received, regardless of its form. Tax brackets are determined by income as defined in section 1 of the ITA, with third-party data playing a crucial role in allocating taxpayers to the appropriate bracket.
“It must be reiterated that it remains the social influencers’ legal obligation to declare all income received,” SARS said.
Importantly, remuneration extends beyond cash payments. “No matter how social influencers are remunerated – whether with products, services, or travel – all of these are deemed as income and must be taxed accordingly.”
This includes income from brand collaborations, sponsored content, and affiliate marketing. Even in barter arrangements, such as exchanging a social media post for goods, the absence of cash exchange does not exempt the transaction from tax obligations. Influencers benefiting financially through free products, services, or travel perks must contribute to the fiscus, SARS said.
Support for influencers
SARS said its compliance theory is based on the belief that taxpayers are honest and will comply voluntarily when provided with clarity and certainty about their obligations. To support this, the authority offers various tools and initiatives tailored to different segments, including social influencers. SARS has prepared products and videos to help social influencers meet their obligations, with plans to provide seminars, webinars, and rulings for further education and outreach.
SARS Commissioner Edward Kieswetter reinforced the authority’s supportive stance towards social influencers. “SARS is looking forward to working with this segment to provide clarity and certainty, but also to provide them with a seamless taxpayer experience,” he said. “SARS is more than willing to assist honest taxpayers to comply with their tax obligations. I am reminding social influencers to uphold their end of the bargain.”
