Malaysia Influencers Question New Tax Rules on Free Gifts
KUALA LUMPUR: Nuridah Mohamed, a 39-year-old tenant coordinator, supplements her income by promoting beauty and lifestyle products on TikTok. Sellers often send free samples to creators like her, who then earn commissions on sales generated through the platform. These part-time promoters differ significantly from high-profile influencers with massive followings who secure lucrative brand deals.
New guidelines from Malaysia’s Inland Revenue Board (LHDN), released on January 14, require influencers to declare all income, including free products and services received for promotions or reviews. The rules apply to anyone producing social media content for advertising purposes, encompassing politicians, artists, athletes, religious figures, and even housewives. No minimum value threshold exists for these non-cash benefits.
Nuridah, who maintains around 13,000 TikTok followers and 3,400 on Instagram, classifies as a micro-influencer with a following between 10,000 and 100,000. She receives numerous low-value samples from various sellers, complicating accurate tracking. Nuridah suggests declaring only gifts or services exceeding RM200 (US$51) in value.
“The free samples we receive do not always lead to strong sales, making the guidelines even more burdensome,” Nuridah stated. Many beginners promote low-value items for free to build their audience, but she now hesitates to accept samples to avoid legal issues. “Small creators like us seek side income, yet even this faces taxation,” she added. From this point, she plans to select collaborations more carefully.
Expert Guidance for Compliance
Soh Lian Seng, head of tax at KPMG Malaysia, recommends treating influencer activities as a small business. Creators must maintain records of all receipts, including cash, products, hotel stays, and sponsored services. “Document the value of sponsored items upon receipt; they count as income regardless of payment,” Soh advised.
For agency-managed deals, clear contracts and payment confirmations are essential to prevent disputes. Businesses engaging influencers should formalize agreements with contracts, invoices, and detailed documentation. “Record sponsored products’ values in your systems and ensure alignment with LHDN’s e-invoicing mandates,” Soh emphasized.
Under existing Malaysian income tax laws, business-derived income, including in-kind benefits from promotional activities, has always been taxable. Previously, informal creators often overlooked gifts as taxable, leading to ambiguities in valuation and reporting. The guidelines now promote voluntary compliance and integrate the creator economy into the tax system equitably.
Impact on Smaller Creators
A 2025 report on Malaysia’s digital landscape reveals that 54 percent of Malaysians discover brands via influencer videos. The influencer marketing sector reached RM150 million in 2023 and is expected to surpass RM300 million by 2026, fueled by social media engagement and consumer trust in creators.
Industry observers note the rules enhance transparency and encourage fair cash payments, protecting creators from exploitative exchanges. However, smaller influencers, who often accept freebies over cash, face heightened burdens. Questions arise over PR gifts, unpaid favors, and retrospective declarations for the upcoming tax season. Individuals without business income file by April 30, while business operators have until June 30.
Nur Syafinaz Vani, tax partner at Zul Rafique & Partners, and John Van Huizen, senior legal associate, highlight the heavier load on micro-creators. “They must value items, record details, and tax non-cash benefits, potentially straining cash flow amid unclear valuation guidance,” they stated.
Calls for Greater Clarity
Ainaa, a 31-year-old full-time creator with 36,500 Instagram followers (@n.ainaafiqahh), views the changes as professionalizing the field. “It demands more admin work, like valuing collaborations, but fosters sustainable practices,” she said. She urges support for smaller creators to adapt.
Dharshamini Kesavan, 37, a full-time creator since 2023 with over 79,000 Instagram followers (@dharshamini_kesavan), sees benefits in accountability. “It shields us from budgetless clients pushing product exchanges,” she noted. Yet, she questions taxing CSR gifts or job-required services like spa visits. “Clearer dos and don’ts, including thresholds, would simplify compliance,” Dharshamini added.
Timothy Tiah, founder of social media network Nuffnang and now a co-working space operator, predicts many unaware influencers may under-declare. Educated ones will demand cash, challenging SMEs with limited budgets. “SMEs rely on product swaps for local support, but taxation alters this,” Tiah said. He now rejects free products from clients to avoid taxes and queries PR goodie bags and past-year declarations. “Gifts below RM1,000 might warrant exemption; currently, questions outnumber answers,” he remarked.
Zul Rafique & Partners affirm the policy’s logic but note practical issues like valuing benefits and record-keeping uncertainties, which could hinder compliance without further details.
Regional Trends in Influencer Taxation
Malaysia’s framework aligns with Southeast Asian efforts to tax digital incomes. Soh describes it as detailed, uniquely covering object-based influencers like mascots.
Singapore exempts one-off gifts under S$100 if non-recurring, taxing other sponsorships. Indonesia’s 2026 reforms emphasize digital surveillance and 0.5 percent taxes on business creators, exempting small revenues. The Philippines mandates declaring all social media income and fair market values, treating creators as businesses with strict bookkeeping.
Malaysia balances these approaches, offering guidance on non-cash and foreign incomes without broad withholding taxes. LHDN monitors public posts for income indicators, aided by business records. E-invoicing will enhance tracking via digital trails, allowing targeted audits.
Recent data shows influencer tax filings surging fourfold to 1,250 by April 2024. Penalties for non-declaration include fines from RM200 to RM20,000, up to six months’ jail, or both; repeat offenders face tripled taxes. Tiah welcomes the alignment with global norms but seeks enforcement clarity. “Penalties are severe, so small gifts might get leniency, though it’s uncertain.”
