Do Youtubers, TikTokers, Bloggers or Influencers need to pay tax in Malaysia?

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Influencers need to pay tax in Malaysia

Do influencers need to pay tax in Malaysia?

There’s an increase of digital content makers in the industry these days and there’s questions if they need to pay tax.

These digital content creators can be bloggers, gamers, tiktokers, youtubers, or any social media influencer who use social media and online media to generate income.

It’s considered easy to do, and everyone can actually jump on the bandwagon to start earning.

You do not need any special qualification to be a content creator, so many are trying to earn by becoming one.

THE GREY AREA OF TAX IN MALAYSIA

But of course, once you already start making money, there’s a question about tax.

Technically, the Malaysian Inland Revenue Board (Best known as LHDN), taxes anyone who earns money in Malaysia, but since content creators using social media is something new, there’s a question if they need to pay taxes.

Aside from that, there’s also a question about can they be taxed since most might be earning from outside sources like Google, Amazon or other parties, which aren’t Malaysian based.

That said, there’s a grey area among Malaysian content creators, namely Youtubers, TikTokers, Bloggers or Influencers about paying tax.

SO, WHO GETS TAXED IN MALAYSIA?

But this ‘grey area’ is probably just lingering among these group of people because for LHDN, it’s pretty straight forward.

LHDN clearly states that you need to pay taxes as long as you make money in Malaysia, so that means any kind of income generated on Malaysian soil is taxable.

However, the government also doesn’t tax anyone any how. There’s a minimum earnings which you need to hit before you need to pay taxes.

A content creator shooting a photo.

According to AskLegal, the minimum income is set at is RM34,000 per year (roughly RM2,888.33 per month) after EPF deductions. I believe this was before the 2021 budget, so the figure might change.

LHDN also clearly states this figure on their website by saying “with effect year 2015 an individual who earns an annual employment income of RM34,000 (after EPF deduction) has to register a tax file.”

LHDN further clarifies that “an individual who is resident in Malaysia is taxable on all income accruing in or derived from Malaysia and on income received from outside Malaysia.” which means that any income you get while being in Malaysia is taxable, even though the source of the income isn’t from Malaysia.  This is like adverts from Adsense, Youtube, Facebook and TikTok.

AskLegal further explains this by saying the amount taxable also includes payments which are paid with products and holidays/tours.

The article by AskLegal says that these sort of payments are considered as ‘payment in kind’ and is therefore taxable.

WHAT ABOUT CASH PRIZES OR FREEBIES?

I know this brings up the question of whether you’d be taxed if you are given cash money or freebies.

Well, according to the same article by AskLegal, items and payments that are considered gifts aren’t taxable.

This means that you won’t be taxed for items which are given to you as a present, lottery winnings or gifts.

Free trips are also considered payment.

I know this opens a whole new question on what’s what, but I guess how an item is declared would define if its taxable or not.

For instance, if you went to an event not knowing you would be paid, and you were given cash as a present, it’s not taxable.

However, if you went to an event because you know you will be paid, it is taxable.  The same thing goes to products and services you obtain for free without any expectation of getting them.

SO SHOULD I DECLARE MY INCOME AND HOW CAN I DO IT?

By right, any income you generate, be it from winnings or paid engagements should be declared to LHDN.

This also means that influencers need to pay tax in Malaysia.

Secondly, filing your income to LHDN is not difficult.

All you need to do is go to the LHDN Website and register as a tax payer.

Since content creators aren’t business owners, you should register as an ‘Individual without business income‘, but if you have a company and payment is made via that company, ‘Individual with business income’ should be the way to go.

Thirdly, it is an offense to evade tax, and detecting your income these days isn’t hard.

Malaysia Airlines air hostess.

When I filled for my Adsense income, I was asked to give up plenty of information which I believe could be used to trace how much I earn as a content creator.

That said, it won’t be a surprise if LHDN actually knows how much one is earning from other means, and is trying to evade tax.

SO INFLUENCERS NEED TO PAY TAX IN MALAYSIA

If you don’t want to end up paying a fine, which could be 300% of what you owe, or even more, it’s best just to declare every income you gain.

Influencers need to pay tax in Malaysia
My blog since 2008

After all, earning over RM34K a year from social media does mean that you’d have to be a serious player in the industry.

On top of that, I’ll be straight honest that even I don’t command that sort of income despite blogging since 2004.

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