Bloggers still uncertain over non-monetary benefits
Bloggers surprised by Iras reminder to declare non-monetary benefits have only two more weeks to work things out
With little more than two weeks to the income tax filing deadline, social media marketing agency Nuffnang has met with the Inland Revenue Authority of Singapore (Iras) to clarify the need to declare the non-monetary benefits-in-kind received by its bloggers and influencers.
The other major player in Singapore, Gushcloud, says it is also asking for a meeting with Iras, but no date has been set yet.
It wants to make clearthe things to be declared and the industry's workings in terms of remuneration, be it in cash or in-kind, among other concerns, says its co-founder, Miss Althea Lim.
A letter from Iras to bloggers seems to have caught the blogging community by surprise.
Part of the letter, which surfaced on the Internet last month, said: "All non-monetary benefits such as sponsorships, products and services received are considered gains and profits from services provided as a social media influencer (including blogger, YouTuber).
"As such, the market value of such products/services will be subject to tax and must be reported."
MISTAKES
Despite the shock expressed by the blogging community, Iras has clarified that its stance is not new: It does remind self-employed individuals as they tend to make mistakes.
In other words, they may not be declaring their incomes correctly and therefore may not be paying the right amount of tax - and bloggers are among the group of people who are at "risk" of noncompliance.
Blogging as a hobby is not considered a business in general, says Iras.
But if it is done repeatedly for monetary and non-monetary rewards, it should be assessed as a self-employed person's income.
It does not matter if they have heard from Iras or not, or if they are doing it full time or part time.
Most bloggers expressed shock as they did not know that gifts-in-kind can be taxed.
When The New Paper on Sunday contacted full-time blogger Wendy Cheng, who goes by the moniker Xiaxue, she said she was surprised as this was the first time she received the letter from Iras.
The mother of one, who started full-time blogging in 2005, says: "The letter was very targeted - it was obviously for bloggers.
"It has never occurred to me that blogging has become a recognised profession over the years."
In response to the letter, she says she is "trying to collate things I've received in the past year and putting an estimated value to them".
For instance, she is going through her Instagram for advertorial posts in the past year.
STILL WAITING FOR CLARIFICATIONS
As for non-monetary benefits-in-kind prior to last year, Ms Cheng says she is still waiting for clarifications.
She says: "It's not fair for me to estimate (the value) now. The company may have given me a discount then, and it may not be applicable now."
She adds that in previous years, she declared her taxes based on her monetary income.
Iras says it is sending out letters, including to lawyers, doctors, accountants and tutors, as an educational approach.
Those who do not have all their income and deduction details by the tax filing deadline of April 18 have a grace period of one year to supplement the details by writing in, it says.
To help its bloggers, Nuffnang says: "We have a dashboard where our bloggers and influencers can log on to view their earnings, which helps them organise their income statements."
Miss Lim says Gushcloud has been actively reminding its contracted influencers of the tax filing deadline since 2013.
Besides answering their questions, it also conducts workshops and one-on-one chats with a tax expert, where questions about what is considered income and what should be declared are addressed.
The maximum penalty for omission or under-declaration of income without reasonable cause is 200 per cent of the tax undercharged.
For very serious tax fraud or evasion cases, the maximum penalty is 400 per cent of the tax undercharged.
''The letter was very targeted — it was obviously for bloggers. It has never occurred to me that blogging has become a recognised profession over the years.''
— Full-time blogger Wendy Cheng (above ), who goes by the moniker Xiaxue
''(Some bloggers) have been quite loud about how much they earn. People will be wondering how much they pay in
terms of taxes.''
— Blogger Peggy Heng (above), also known as ThyDowager, registered a sole proprietorship for her advertising and marketing business about two years ago
'I knew it was going to happen some day'
She had foreseen that the taxman would one day go after bloggers for their social media marketing activities.
So, blogger Peggy Heng, also known as ThyDowager, registered a sole proprietorship for her advertising and marketing business, which includes blogging and social media branding, about two years ago.
She tells The New Paper on Sunday: "I've expected that some day, something like this would happen - that social media would grow so large that the Government would realise that this is a part it is missing out."
Miss Heng, who is also a deejay and runs a talent agency and events company, adds that bloggers may not feel the need to declare their non-monetary benefits-in-kind.
"Many bloggers started out writing online for passion. But it has evolved into something unexpected," she says.
She notes that some bloggers "have been quite loud about how much they earn. People will be wondering how much they pay in terms of taxes."
Miss Heng started blogging when she was 17 years old and turned full time about two years ago.
She says: "The revenue was really good at the point in time. There was a lot of demand. I decided to go full time and set up my own branding company."
She says that she now works with about 20 prominent influencers, and a one-year endorsement for clients can range from $15,000 to $30,000.
She also charges anything from "hundreds to thousands" for an Instagram or Facebook advertorial post. But as they are done through her company, her tax accounts are all kosher, she says.
Among her clients are the national water agency PUB, TyreQueen, Beijing 101, hotels and restaurants.
What tax experts say
We put out some common questions to global mobility senior manager Mark Amatya and director Girish Naik with PwC International Assignment Services:
HOW WILL BLOGGERS AND INFLUENCERS BE TAXED?
Mr Amatya says the net income of bloggers and influencers, who are considered self-employed, will be taxed at the individual tax rates.
They range from 0 per cent to 22 per cent.
He says: "If the blogging activity is conducted via a company, the corporate tax rate of 17 per cent applies to income received by the company.
"Reliefs, deductions and exemptions are available to both individuals and companies."
HOW DO YOU VALUE A RESTAURANT MEAL THAT A BLOGGER REVIEWED OR AN OVERSEAS TRIP TO REVIEW FOOD FROM SEVERAL RESTAURANTS?
Mr Naiksays: "The fair market value of the relevant benefit will be considered for taxation purposes.
"So, in the given example, the cost of the meal or travel expenses otherwise incurred by the provider could be considered.
"As a best practice, bloggers should request for receipt or statement of such items from the provider."
IS THE REQUIREMENT TO DECLARE NON-MONETARY BENEFITS-IN-KIND A NEW MOVE?
Mr Amatya says similar tax rules have been implemented in other countries such as the United States and Britain, where blogging is commonplace.
He says: "While Iras (Inland Revenue Authority of Singapore) is right to increase awareness regarding tax filing requirements within the blogging community, providing more detailed guidelines on grey areas such as valuation of the non-cash benefits-in-kind and the eligibility for claiming deductible expenses will be very helpful to facilitate compliance.
"An e-guide setting out the 'frequently asked questions and answers' would be very welcome."
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