Rebecca is 23 years old social media influencer, who started her journey 2 years back by reviewing cafés around the city, and walked through the stair of fame within a short period of time. Recently, she became the talk of the town after gifting her family a luxurious car. The video she uploaded on this segment, got enough views, exposure and mixed reaction from the general people as well. The problem arose when someone dig into Rebecca’s personal life and family background, and got to know that her parents’ company is involved with tax evasion which circulates around 4 crore taka of money laundering to the government for past 3 years. So, the question which arise among people is, if Rebecca has enough money to buy a luxury car, why cannot she pay up the taxes which was imposed on her family’s company?
The story looks familiar, isn’t it? Similar story of an influencer recently stirred a lot chaos on the social media. Mass people have this inquisition, where are all these money coming from? How influencers are earning this abundant money? How is it this limitless? The answer is simple. Influencers earn a lot through, digital marketing, sponsorships, affiliated marketing, brand endorsement, collaboration, presence or by simply selling products through their social media feed. According to Hypeauditor, on average, influencers earn $2,970 monthly or $35,640 annually.
We have seen the rise of influencer and content creator market in Bangladesh. During the Corona period, and Post-Corona Period, Bangladesh has seen an increasing number of influencers in different platforms. According to Starngage, there are 1886 influencers in Bangladesh, who have between 1000-10M followers. Influencers even set up their own business and promote that in their social media platform. Due to their popularity, their businesses and diversified income sources do get hyped up and stand out within a short period of time. Despite of having a big earning source, influencers do not need to pay taxes.
As the cumulative value of influencers’ earnings from multiple sources are still not tracked and understood by the authority, their total income is underestimated and thus it does not get reported.
On the other hand, influencing is not considered as a real job and it is still considered as an informal source of earning. Also, sometimes, influencers work for international sources, complicating the tax obligations. And sometimes, they get paid through cash or informal channels by the sponsors or brands, making it easier to avoid detection by tax authorities and tempting influencers to bypass the tax system.Some influencers do pay up tax, if the own any business, but according to the insider resources, most of them do not register their business, or do not have trade license. Sometimes, they sell up product through their own social media account so it does not require any legal license.
Influencers earn a lot through, digital marketing, sponsorships, affiliated
marketing, brand endorsement,
collaboration, presence or by
simply selling products through
their social media feed
Although, the growing market of influencers and content creators, and the way the new generation is considering Influencing a potential income source, government should imply taxes on the income of social media influencers. Perhaps Government need to go through some barriers to generate revenue from social media influencers.
First of all, government should formulate a robust and flexible tax strategy, allocate resources for better enforcement and administration, and work with international counterparts to manage cross-border taxation issues. Additionally, it is essential to create precise tax regulations that cater to the unique challenges of social media influencers and their varied business models, and different source of earnings. Secondly, Bangladesh should issue license for the influencers, so it will be easier to track them. In the recent times, we have seen how influencers scam or badly influence the mass, and gets revealed after a while, which can create a huge ruckus among the general people. This has become a regular phenomena in the virtual world. Through licensing, government can reduce this issue as well, also licensing can create a countability among the influencers. Licensing influencer is nothing new although. Recently, the United Arab Emirates (UAE) mandated that social media influencers must obtain a license to share content and monetize their posts. Approximately 1,700 licenses have been issued so far, each costing around US$4,000 annually. Applicants must be at least 21 years old and hold a bachelor’s degree to qualify for a license. The UAE also retains the authority to revoke an influencer’s license if they deceive the mass.
Paying up taxes, might help influencers to contribute in the economy of our country, create an equality among the people, and ensure fairness of earning. It reflects their commitment to the community and the country's well-being. Also it helps to avoid tax evasion and illegal monetary activities.
On the other hand, we have witnessed how people of our country are still unaware of paying their taxes and most of the people do not pay their taxes properly. If government imply taxes on influencers, they might encourage and hype the mass to pay up their taxes as well. This is how, paying tax might not seen as a liability, but as a trend.
Author is a student of the Department of Accounting and Information Systems in Bangladesh University of Professionals (BUP)
