Kuala lumpur: Big brand deals, luxury cars, and flashy lifestyles may appear glamorous among social media influencers, but failing to declare such income could land them under the scrutiny of the Inland Revenue Board (IRB), says tax lawyer Nur Amira Ahmad Azhar.
According to BERNAMA News Agency, the partner at Rosli Dahlan Saravana Partnership highlighted that the IRB can issue a ‘best-judgement assessment’ for influencers by estimating their income using bank statements, high-value purchases, property, cars, and even their visible lifestyle. This could result in a substantial tax bill for those who do not report their earnings.
Nur Amira explained that income from various online activities, including sponsored posts, brand collaborations, affiliate sales, product endorsements, and monetisation from platforms like YouTube and TikTok, is treated as business or self-employment income under Section 4(a) of the Income Tax Act 1967. If there is regular income or commercial intent, the IRB considers it as running a business, even if it’s conducted from home, without a company, or as a side activity.
She emphasized that the IRB may consider most bank deposits as income unless individuals can prove otherwise, and they may assume very little or no deductible expenses due to a lack of proper records. Once a best-judgement assessment is raised, the burden falls on influencers to prove that their income was lower or that they had genuine business expenses.
Nur Amira stressed that without invoices, receipts, contracts, or proper accounts, the IRB will typically disallow claims for expenses, potentially resulting in taxpayers having to pay tax along with penalties and late-payment charges on an inflated amount. This situation could have been avoided if proper declarations were made from the outset.
She also warned that failing to declare income can lead to severe consequences, including the risk of bankruptcy and travel restrictions. As a precautionary measure, Nur Amira advised influencers who have not yet declared income from previous years to make a voluntary disclosure to the IRB to avoid harsher penalties. She urged them to declare their income, submit amended tax returns, and pay the tax due, noting that a voluntary approach is viewed more favorably than waiting for an audit. “Good records protect you. Absence of records exposes you,’ she concluded.