This article was originally on GET.com at: IRAS Wants Bloggers To Declare Sponsored Items: 2 Reasons Why That May Be Impractical
It is tax season in Singapore right now. This is the time of the year when eligible income earners scramble to file their taxes or risk paying a penalty should one under-declare or forget to declare, whichever the case may be.
If you've been keeping up with local news lately, our taxmen has caused much distress for our Singaporean social media darlings who make tons of money and receive more than enough products to last a lifetime doing the fun and ostensibly glamorous things that they do, by sending them a memo regarding declaration of sponsored items received.
Without favouring any side, here are two reasons why this requirement may be impractical.
1. There are just too many loopholes
It doesn't take a prodigy to realise that there are simply too many loopholes out there to render IRAS' efforts in tracking down tax returns 100 per cent foolproof.
According to IRAS' FAQ for social media influencers, they've made clear that the income somebody "received from social media marketing activities such as blogging, YouTubing, etc. will be assessed as self-employed income once it is ascertained that you are carrying on a trade or business".
Well, does this mean that IRAS will be working hard to keep tabs on who is active on social media making a living out of it and who's not?
Seriously, there are so many small-time bloggers and Instagrammers across the globe and in Singapore - how is it even possible to track down every single one of these bloggers or "social media influencers" regardless of their popularity and/or outreach?
Good luck to whoever's been tasked to trawl the internet and various social media platforms where such marketing activities are carried out!
Besides, many social media influencers attend events, invites, overseas trips and receive all sorts of perks and products provided to them by brands' own initiatives, how are they supposed to remember which ones they've been to, how much a meal at a fancy gastropub costs, how much a limited edition jacket or a swanky hotel room costs, etc?
2. Inefficiency is not cool
As though keeping up with making money and surviving in Singapore isn't tough enough already, this clause that's recently in the spotlight is set to create a lot more inefficiencies. And inefficiencies are bad because there are costs and opportunity costs involved.
Not only does the taxman and his squad need to spend sizeable amounts of time and energy tracking down bloggers and ensuring that whatever is being declared is accurate, busy social media influencers have to set aside time to slowly scour through the back of their heads (or emails, messages, calls, skype conversations and what have you) recalling how much each taxable sponsored item costs.
Will this be a case of a tax law that costs more to enforce than what it can bring in in terms of tax revenue?
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