SARS has a new target BY Bianke Neethling

[Nat Quinn]

SARS has a new target BY Bianke Neethling

With digital marketing expenditure expected to surpass R500 million in 2024, influencers are becoming increasingly lucrative economic players, making them an ideal target for the South African Revenue Service (SARS).

This is according to the Managing Director at Vantage Advisory, Luncedo Mtwentwe, who cautioned that many influencers overlook the need to operate as businesses. This misstep can result in serious compliance challenges.

This is concerning, as South Africa’s influencer economy is booming, with digital marketing expenditure in South Africa forecasted to exceed R850 million by 2030.

“As the industry expands, online influencers are emerging as key economic drivers, cashing in on substantial earnings,” Mtwentwe.

“Much like the gig economy, where companies engage independent contractors for short-term projects, influencers are generally compensated on a per-campaign or brand-partnership basis.”

According to the newly released 2024 South African Influencer Benchmark Report, local influencers can charge between R3,000 and R18,000 for a single Instagram post and up to R8,000 for a reel.

Mtwentwe noted that social media advertisement spending spiked by as much as 30% globally during the festive period, a trend echoed in South Africa.

This means that local influencers are likely to earn significantly more during this time.

“However, with significant earning potential comes an even greater tax responsibility,” he said.

“Social media influencers are driving billions into the economy, yet too many fail to recognise themselves as brands in their own right.”

“This lack of awareness puts them at serious risk, especially as the online nature of social media makes it easier for SARS to track income and ramp up its enforcement efforts.”

“Whether it’s cash payments or promotional gifts, undeclared income could result in penalties that not only drain earnings but also jeopardise careers.”

He explained that to succeed as a brand, influencers need to act like a brand and emphasised that transparency and compliance should be part of that.

For influencers falling short of compliance, the SARS Voluntary Disclosure Programme (VDP), launched in 2012, offers a valuable second chance to get back on track.

Mtwentwe explained that the VDP enables taxpayers to declare previously undeclared income and avoid severe penalties – provided they act proactively and approach SARS before an audit is initiated.

However, while the VDP serves as a critical lifeline for influencers who have overlooked their tax obligations, it is not a one-size-fits-all solution.

“To benefit from the VDP, you must act before SARS identifies non-compliance, and it is important to note that leniency isn’t guaranteed after that point,” he warned.

“To avoid this risk altogether, compliance must evolve into a lifelong habit. Tax laws are constantly changing, and staying compliant is an ongoing responsibility.”

He explained that many influencers face challenges because they do not treat their activities as businesses.

For instance, some use personal bank accounts to receive income, which automatically categorises them as sole traders, subjecting them to additional scrutiny.

However, he said the responsibility of being tax-aware doesn’t rest solely on influencers, though.

“Marketing agencies should also play a role in educating influencers about their contribution to the economy and their compliance responsibilities under tax laws and regulations,” he said.

 

SOURCE:SARS has a new target – Daily Investor

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