TikTok bloggers under tax authorities' scrutiny: fines and criminal prosecution await those who do not declare their earnings

The IRS is targeting influencers, particularly TikTok influencers, who earn income from their social media activities but fail to report it.

With revenue from advertising partnerships, sponsorships and merchandise sales growing through platforms like TikTok, The Independent Authority for National Revenue (AADE) is stepping up checks to detect tax evasion.

While the bulk of influencers' income (and not a small amount) comes from deals with companies for specific posts, many participate in programs like the Creator Fund to gain additional benefits.

In addition to advertising, TikTok has a number of built-in payment tools, such as virtual “gifts” and the Creator Fund, which is intended for users with at least 10,000 followers and 100,000 views in a 30-day period.

Additionally, through the TikTok Pulse program, the platform shares advertising revenue with creators. TikTok participants can also earn virtual “prizes” during live broadcasts that can be converted into cash. Prizes range from $20 to $300 per live stream, and you can earn up to $34,000 per month.

According to the law, Influencers' income from product promotion and advertising, as well as related income from TikTok, is considered entrepreneurial income. Therefore, TikToker is obliged to start the activity and comply with all necessary tax procedures (VAT, MyData, income tax, etc.). TikTokers who fail to declare their winnings face serious penalties, such as fines and criminal prosecution.

Authorities are using modern tools and technologies to detect such cases, looking for data on financial transactions and the movement of money in users' bank accounts. AADE has created a special task force to identify “black money” routes on social networks and find bloggers who declare minimal income.

This small group of 7-8 people works under the Directorate of Operational Control Planning (DIESEL) and is called “Department for prioritizing control cases and identifying trends in offenses.” The group conducts extensive investigations on the Internet and social networks in order to identify taxpayers who carry out business activities without filing declarations on their commencement, without maintaining accounting records and issuing tax documents, and without declaring the turnover they carry out.

In addition to tax violations, the probes extend to purchases, travel and real estate, as well as the lifestyle of influential people. The goal is to determine whether they correctly declare their operations from the promotion or sale of goods and services. In particular, to verify their assets, photographs, dates and posts on social networks are recorded.

The ultimate goal of AADE is to ensure that digital entrepreneurs comply with tax laws and pay the taxes they owe.

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