Tax Obligations for Digital Content Creators in Malaysia

Tax Obligations for Digital Content Creators in Malaysia

The Inland Revenue Board of Malaysia (LHDN) recently clarified that all digital content creators must comply with Malaysias tax laws regardless of platform or income level. This applies to YouTubers, TikTokers, Instagram personalities, and anyone monetising their online presence through sponsored content, paid reviews, or digital services.

In an interview with Bernama Radio, LHDN Principal Assistant Director Syed Mohd Syukree Syed Mohd Kamil underscored that individuals receiving payment for content or services engage in business activities and must report this income accordingly. Failure to declare these earnings within the required timeframes is a criminal offence that can lead to severe legal consequences.

According to Section 112 of the Income Tax Act 1967, non-compliance with tax return submission requirements can result in penalties ranging from RM200 to RM20,000, imprisonment for up to six months, or both upon conviction. These consequences underscore the seriousness of tax compliance and the need to adhere to the deadlines.

Syed further cautioned that tax non-compliance could trigger comprehensive audits involving detailed examination of all business transactions and financial documentation. This process is complex, time-consuming, and could significantly damage the content creators reputation and financial standing. It highlights the potential risks and consequences of non-compliance and the need for vigilance in tax matters.

Business owners must submit Form B or e-B through the MyTax portal between March 1 and July 15. Additionally, proper tax records must be maintained for a minimum of seven years, in accordance with standard requirements. Syed noted that fulfilling these obligations not only enhances business credibility and reputation by demonstrating legitimacy and responsibility but also ensures a clear financial record for future business opportunities, underscoring the necessity of this task.

Importantly, all business owners must declare their income regardless of profitability. While businesses operating at a loss may not necessarily incur tax liability, this depends on whether the individual earns additional income through salary or other content-related services. This underscores the importance of tax compliance, regardless of the business financial status, and the responsibility that comes with it.

In October 2024, LHDN announced plans to incorporate influencer earnings into the digital economy framework. The agency noted that macro-influencers with over 100,000 followers often establish full-time careers through paid social media and content creation. The agency also reported that micro-influencers with over 10,000 followers typically secure approximately five monthly promotional opportunities.

Influencer Tax Compliance

Recent data reveals significant growth in influencer tax compliance.

The Star reported in May 2024 that LHDN observed a substantial increase in tax compliance among influencers and social media earners.

Declarations rose nearly fourfold, from 390 files in 2023 to 1,250 as of April 2024, primarily due to awareness of potential consequences for non-compliance.

As of May 2024, 86 influencers had opened tax files and paid RM908,325 in taxes.

This continues a positive trend that saw LHDN collecting:

RM5.144 million from 450 files in 2020; and

RM5.734 million from 507 files in 2022.

These figures reflect increasingly effective enforcement and growing awareness among digital creators about their tax obligations.

The tax authority employs several strategies to ensure compliance:

Localised monitoring: Each state maintains dedicated units with officers who track local influencers and online sellers across platforms like TikTok and Instagram.

Direct engagement: Officers send official emails to specific individuals advising them on compliance requirements.

Nudging campaigns: LHDN collaborates with prominent local influencers to promote tax compliance among their peers.

Targeted communications: Nudging activities have intensified, with outreach emails increasing from 649 in 2020 to 704 in 2022.

LHDN actively conducts audits to ensure accurate reporting:

Of 450 influencers filing in 2020, 165 underwent audits, yielding RM963,889 in additional taxes.

In 2021, audits of 89 influencers (from 486 total filers) generated an extra RM2.06 million.

Recap of Income Tax Obligations for Malaysian Influencers

Under Malaysian tax law, individuals earning an annual income of RM30,000 or more through sales or services must declare that income. Additionally, influencers may be called to explain sudden asset acquisitions that don’t align with their declared personal income.

Digital creators are classified as individual taxpayers with business income and must:

File annual returns through the MyTax portals e-Filing service.

Meet filing and payment deadlines.

Maintain comprehensive financial records for seven years.

The penalties for non-compliance include:

Financial penalties ranging from RM200 to RM20,000.

Potential imprisonment up to six months under Section 112 of the Income Tax Act 1967

Additional penalties for inadequate record-keeping.

Comprehensive tax audits that can damage reputation and financial stability.

Sources:

Influencers and content creators to declare their income, says LHDN. Marketing Interactive, 11 April 2025. See: https://www.marketing-interactive.com/influencers-content-creators-to-declare-their-income-says-lhdn