SARS clarifies target on new group of taxpayers in South Africa
The South African Revenue Service (SARS) has moved to clarify its position on social media influencers in the country, and how its new categorisation of the field will work.
The service announced in August that it had created a new category of tax focus for social media influencers, with tax experts warning any South Africans engaging in this activity to get their affairs in order.
Social media influencers are a new and emerging field of marketing in South Africa where individuals are often paid—be it monetarily or in-kind—to market products and services to their social media followings.
According to SARS, these payments, whether they are typical remuneration or through sponsored products, services and travel, are deemed income.
“Full voluntary disclosure is critical. No matter how social influencers are remunerated, all of these are deemed as income and must be taxed accordingly,” it said.
The revenue service said its legal mandate is to collect all revenue that is due to the state, improve tax compliance, and facilitate legitimate trade, and emerging fields need to pay their dues.
SARS explained that it organises taxpayers into segments to ensure that it provides services to meet differing tax needs.
In August, it expanded its segmentation model, now recognising:
- Standard taxpayers (comprising taxpayers with a single income and simple returns);
- Large and International Businesses;
- High Wealth Individuals;
- Public Benefit Organisations;
- Prominent and Related Entities;
- Estates;
- Tax Practitioners;
- Employers;
- National and Provincial Government (new);
- Social Influencers (new);
- Gig Economy (new).
The segment of social influencers is composed of “modern entrepreneurs”, SARS said, who can be classified as sole proprietors or independent contractors.
“When managing this segment, SARS will handle each such situation on a case-by-case basis according to current income-tax brackets. Some of these cases may generally fall into the provisional-taxpayer category,” it noted.
SARS said it is crucual that these segments exist, and that the service can provide clarity and certainty to make it easier for taxpayers to comply.
It added that it’s also important to recognise new emerging segments that are evolving and adapting to technologies—partcularly when breaking from traditional segments.
What influencers need to declare
For social media influencers, their field is a break from traditional marketing, which warranted its own segment.
SARS warned that, while it will continue to leverage third-party data to determine where each taxpayer must be allocated in terms of income bracket, it remains the social influencers’ legal obligation to declare all income received.
“Although the social-influencer segment has its own nuances, it is no different to other taxpayer segments in that income earned must be disclosed and taxed. Freelance work is similar,” SARS said.
South African social influencers are encouraged to declare:
- Income earned from brand collaboration;
- Income earned from sponsored content;
- Income earned from affiliate marketing;
- Income earned in cash, products, or services.
“In line with our compliance theory, SARS believes that taxpayers are honest: when they are clear and certain of their obligations, they comply voluntarily,” it said.
“SARS believes that social influencers will declare honestly when adequately educated.”
This is another reason for creating the new category, it said. In this regard, SARS has prepared products and videos to help these taxpayers meet their obligations.
SARS said it aims to do much more in terms of outreach and education, and will also provide seminars and webinars as well as rulings to educate taxpayers about their obligations.
Commissioner Edward Kieswetter said that SARS is more than willing to assist honest taxpayers in complying with their tax obligations.
“I am reminding social influencers to uphold their end of the bargain,” he said.
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