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(Ecofin Agency) – No African country has established specific tax rules for influencers, who remain under general tax regimes. Only a few countries, like Cameroon and Kenya, tax influencers primarily on social media income.
As influencer marketing gains economic importance in Africa, setting up taxes for influencers remains challenging due to the vague nature of this activity and its revenue, according to a report released on May 29 by Ecofin Pro.
The report, titled “African Tax Authorities Eye Growing Influencer Marketing Market,” highlights the increasing influence of African influencers. In 2015, only 33% of brands in Africa used influencers to promote their products. By 2020, this rose to 63%. A study by the media monitoring software company Hootsuite showed 38.5% of surveyed companies already work with African influencers, higher than the global average of 34.4%.
Globally, influencer marketing revenue is impressive. Data Bridge Market Research estimated this revenue at $7.36 billion in 2021. It is expected to increase by 850% by 2029, reaching $69 billion.
Influencer marketing spending in Africa (Statista)
Most studies on the African advertising market struggle to quantify influencer marketing revenue. In Africa, influencers often operate informally, offering their services to individuals for occasional sales, making it difficult for tax authorities to assess sector income. However, several reports provide an outline of the African influencer marketing market and its value.
Challenges in Tracing Collaborations
The Nigerian agency TIMA estimated $159.90 million was spent on influencer promotions in Africa in 2022. Statista puts this figure at $137.3 million, projected to reach $267.5 million by 2028. Despite the market’s economic potential, the visibility of influencers like Senegalese-origin Khaby Lame, who earns over $75,000 per sponsored post, has sparked African tax authorities’ interest in taxing influencers involved in events like the Africa Cup of Nations or election campaigns.
The report notes some African countries have started taxing influencers. In Cameroon, a January 2024 ministerial note now requires content creators to pay a 5% tax on digital platform income from selling goods, providing services, or sharing assets. In Kenya, authorities announced a 15% tax on content creators and influencers in late 2023.
In Morocco, top influencers received tax payment notices from the general tax directorate in 2023. The issue was also discussed by the Tunisian Parliament and Nigeria’s Federal Inland Revenue Services.
Overall, taxing influencers is challenging for tax administrations due to the market’s informal nature. Tracking collaborations between influencers and individuals is difficult outside of companies obligated to declare transactions. Moreover, no African country specifically includes influencers in tax regulations. Even countries taxing influencers, like Cameroon and Kenya, primarily tax social media income.
Influencers are not employees of the brands or agencies they represent, making them independent contractors responsible for paying taxes on their income.
Setting a withholding tax threshold
The difficulties tax authorities face in taxing influencers are not unique to Africa. Few countries globally have regulations for this profession. Countries like France and the UAE only included influencers in their tax frameworks in 2023.
In Africa and worldwide, the key issue is authorities’ ability to prove an influencer ran a campaign and trace financial flows. This requires increased collaboration with third parties like banks and financial institutions that facilitate payments.
While waiting for a global solution, African tax authorities can adopt mechanisms from other regions to capture taxes from influencer marketing campaigns better. For example, African countries could set a threshold where all influencer payments are taxed at the source. This measure could extend to all advertising campaigns, requiring all transactions above a certain amount to be declared and taxed at the source. This practice is used in the U.S., where taxes on influencers are mainly collected from the entity paying for the campaign or the social media platform generating the revenue. Payments over $600 to an influencer trigger a 1099-NEC form, while lower amounts must be declared by the influencer.
For African countries, collaboration with social media platforms to tax influencers’ direct income will be challenging due to the lack of legal representation for these platforms on the continent.
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