Abu Dhabi: The Saudi Shura Council, the country’s official consultative body, on Wednesday discussed tax evasion by social media influencers, demanding the General Zakat and Tax Authority doubles efforts in collecting VAT from them, local media reported.
Dr. Abdullah Al Maghlouth, a member of the Saudi Economic Association, said some celebrities evaded taxes by not registering in the system with the Zakat and Tax Authority.
He called on companies and institutions that deal with social media celebrities to request proof of their registration in the VAT system before dealing with them.
Al Maghlouth told Asharq Al Awsat that VAT is applied to all individuals who engage in an economic activity and are required to sign up in the system if their annual revenues reach 375,000 riyals.
Economic analyst Dr. Salem Baajaja revealed that some celebrities have exploited the loopholes of the system and achieved great profits, especially since many companies have used influencers in their advertisements to win many customers.
The income of social media celebrities depends primarily on ads, which ranges between 3,000 and 75,000 riyals for a single advertisement, depending on the size of the celebrity’s influence and the number of followers on social media.
A recent study on the influencer advertising sector in Saudi Arabia, issued by DRC (specialising in market research and data analysis), called for issuing a professional license for influencers’ work in advertising.
Snapchat tops the list of the most follow-up platforms for ads by 48 per cent, according to the study, followed by Instagram by 29 per cent, then Twitter by 23 per cent, and finally YouTube by 9 per cent.
The study indicates that most agency owners believe that the advertising sector in the Kingdom is unregulated, but they believe that it is a young and new market globally at a time when there is a recent maturity in social media activity with the expansion of the size of users.
The Shura Council has called on the Food and Drug Authority to take more strict measures and enact the necessary penalties to curb influencers’ misleading advertisements.