“Instacelebs”, aka “influencers” aka people who get paid to endorse products to their social media followers (and who are, generally speaking, the worst), are earning big business all over the world, Indonesia included. But the glamorous lives of local Instacelebs may soon get a financial reality check if the Indonesian government starts to impose taxes on their oftentimes lucrative endorsement deals.
Indonesia’s minister of communications and information technology, Rudiantara, recently told the media that the government should be seeking to tax Instacelebs, in that same way that other celebrities would be taxed for income on commercial and advertising work, for the sake of fairness.
“For example, now celebrities are subject to tax rules in the real world. If you perform on TV, for example, then a tax must be imposed. It should be fair,” Rudiantara said at the office of the Coordinating Ministry for Economic Affairs yesterday as quoted by CNBC Indonesia.
Rudiantara admitted that implementing policies to govern social media endorsements could be tricky and the specifics of such a taxation plan hadn’t been worked out. He said the Directorate General of Taxes would have to be in charge of determining the specifics.
However, Hestu Yoga Saksama, a spokesperson for the tax directorate, seemed to contradict the IT Minister’s statement, saying that social media celebrities are already taxed on money earned from endorsements, but in a more general way in the form of their standard annual income tax.
Hestu noted that while celebrities had to self-report such income, another form of verification should come from companies reporting such deals as well.
In addition, Hestu stated that the tax directorate last year started a program to track and collect data on social media users involved in making financial transactions, including those on Instagram.
Rudiantara has not issued any further statements on the topic, but one might guess that he meant that income derived from influencer endorsements should be taxed at a higher rate than general income.
At any rate, it seems clear to us that, even if Indonesia’s Instacelebs may not necessarily need to pay more taxes, the influencer industry needs some kind of greater oversight. Instacelebs such as the controversial Awkarin have gotten into trouble for endorsing unsafe and illegal products such as “vagina tighteners”, but a lack of regulations has allowed them to escape legal consequences.