Social media and digital influencers are required to declare all income linked to their online activities, including free products, gifts, and other benefits received for promotions or reviews. The requirement is set out in updated guidelines issued by the Inland Revenue Board(LHDN) and is already in effect.

The guidance explains how existing tax rules apply to income earned through digital platforms, offering clearer direction for both taxpayers and enforcement officers.

Influencing Treated As A Professional Income Activity

Under the guidelines, influencing is recognised as an activity capable of generating regular and substantial income. LHDN defines influencers not by popularity alone, but by their ability to earn from content creation, endorsements, and marketing activities on social media and digital platforms.

These activities include producing written, audio, or video content, appearing in online programmes or events, promoting products or services, and receiving compensation or benefits connected to that work.

Guidelines Support Consistent Tax Reporting

LHDN said the guidelines are meant to improve consistency in how influencer income is reported and assessed. While they do not introduce a new tax, they clarify what should be declared and how income is categorised.

The Director-General of Inland Revenue has the authority under Section 134A of the Income Tax Act 1967 to issue, amend, or withdraw these guidelines as needed.

Individual And Digital Characters Both Covered

The guidelines distinguish between two main types of influencers. Individual influencers include people from various backgrounds, such as politicians, artistes, athletes, professionals, students, and homemakers, who earn through online influence.

They also cover object-based influencers, which refer to digital identities such as animated characters or fictional personas that are created and managed on social media platforms and attract followers. Income generated through these accounts is subject to the same tax treatment.

Cash And Non-Cash Benefits Count As Income

Income for influencers goes beyond direct payments from brands or platforms. It includes fees earned as brand ambassadors, revenue from merchandise sales, royalties linked to digital characters, and proceeds from selling influencer accounts or identities.

LHDN also clarified that non-cash benefits must be declared if they have monetary value. These can include sponsored products, free services, discount vouchers, or digital rewards received through social media activity.

Business Expenses Must Be Clearly Linked To Income

Influencers may deduct allowable expenses under Section 33 of the Income Tax Act, provided they are incurred in the course of generating income. Examples include internet charges, filming costs, and editing expenses.

Personal spending and capital items are not deductible, reinforcing the need to separate business-related costs from personal use.

Record-Keeping Is A Core Requirement

To support accurate reporting, influencers must maintain records of all income and related expenses. Supporting documents should be kept for seven years from the end of the year in which the tax return is submitted, as they may be required for audit purposes.

Why This Guidance Changes How Influencers Plan Their Earnings

For influencers, the guidelines underline the importance of treating online income as a structured business activity rather than casual earnings. Tracking sponsored items, valuing non-cash benefits, and setting aside funds for tax can help prevent unexpected liabilities.

As influencing continues to grow as a source of income, clearer tax expectations may shape how creators price collaborations, manage cash flow, and make longer-term financial decisions.

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