Taxing Bloggers?

The move by the tax man in Malaysia (as well as Singapore) to force bloggers to declare gifts in exchange as a form of taxable income will no doubt have an echoing effect through the Public relations industry.

Source - www.amiehu.com 

It’s not about whether or not the blogger should pay income tax, or whether the blogger is doing this for commercial venture or hobby; for our industry it is now going to become about how to engage with bloggers as KOL’s, ambassadors, and/or even reviewers in such a way that does not expose them to undue tax obligations.

Such a fundamental change to the system will have its flow on effects – and one source of traditionally cost-effective publicity for us, bloggers, may now end up having to be engaged in a very different way.

For the lay-blogger, the impact will probably be nil – they will continue with their social commentaries on their own, pay-as-they-go and honest review approach – great for PR (assuming they like their purchase experience). But for the professional blogger, those who take it far more seriously than a hobby – and for the PR who engage with them – the impact will be more significant.

It may result in a changing paradigm of engagement – as they look for ways to incur tax-deductable expenses, minimize their “reported revenue (in kind)”, and generally try to avoid taxation obligations. Ultimately, as we engage with bloggers, the traditional model of offering a free product (which is a tax deductible expense for clients in most cases) will change, as we have to adjust our way of incentivising bloggers in order to help them legally minimise their expenses.

Source - www.clotureclub.com 

Worst case, some of our bloggers whom we have come to love and trust, may simply call it a day. After all, it’s a secondary income (in some countries, that is taxed at a higher rate), the inconvenience of the extra work load for filing tax (you know, keeping accurate records, assessing market value of goods and services in kind, etc) may simply outweigh the benefits or simply the time available. PR loses, along with the bloggers audience.

Certainly, for those popular bloggers who have a high volume, they will look at how to streamline their activities to be run more along business lines; which ultimately, the cost of, will be passed to our clients.