Social media influencers under suspicion of avoiding taxes

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By Yoon Ja-young

Despite the explosive growth of e-commerce by social media influencers and creators, only a handful of them are paying taxes.

According to National Tax Service (NTS) data submitted to Rep. Yang Ki-dae of the main opposition Democratic Party of Korea, only 785 influencers making money through social media paid taxes in 2020. They reported a total of 14.1 billion won ($10.8 million) in income.

The number is only a fraction of the total number of influencers. According to Nox Influencer, a social media data provider, there are more than 90,000 influencers in Korea, with each having more than 10,000 Instagram followers. Those with more than 1 million followers totaled 463.

The influencers have diverse income sources, such as advertising and direct sales through their social media channels. The retail industry estimates the scale of Korea's social media market to be around 20 trillion won as of 2019. According to Hype Auditor, which specializes in analyzing trendsetters, influencers who have between 10,000 and 50,000 followers make 2.68 million won on average a month, while those with over 1 million followers earn 19.96 million won.

The country's tax agency, however, has left the sector in a taxation loophole for a long time and included this category in taxation only in September 2019, the lawmaker pointed out.

“The tax system is not catching up with the rapidly developing market. There should be a fair tax system established on such new business sectors, not only for equitable taxation but also for the development of the blooming industry,” he said.

Reflecting the growing power of influencers, elementary school students said in a 2020 survey that the fourth-most-popular dream job was to become creators such as YouTubers, broadcast jockeys and streamers.