Influencer Tax in Malaysia: Free Gifts Are Now Taxable Income

(TAX UPDATE) Influencer Tax in Malaysia: Free Gifts Are Now Taxable Income

(LHDN Guideline Issued 14 January 2026)

Introduction

For many years, the influencer economy lived in a grey area.

Cash payments were declared.
Free products, free stays, free services? Many assumed these were “just gifts”.

On 14 January 2026, Lembaga Hasil Dalam Negeri Malaysia (LHDN) made its position clear.

Both cash income and non-cash rewards received by influencers and digital content creators are now firmly within the scope of tax reporting. Goods, services, facilities, vouchers and discounts are all included.

This is not a new tax. This is LHDN drawing a red line through a long-standing grey area.

If it has monetary value, and it is received because of your content work, it is income.

Key Summary (60-Second Read for SME Owners)

• Influencers are treated as carrying on a business or profession
• Income includes cash and non-cash rewards
• “Gifts” are taxable if received in exchange for services
• Free products, sponsored stays and vouchers now have tax value
• SMEs paying influencers must keep proper documentation

This applies not only to full-time influencers, but also to micro-influencers, part-timers, and directors doing personal branding.

The Tax Position Explained (In Plain English)

1. Influencers Are Treated as Doing a Business

Under Malaysian tax law, LHDN treats content creation as a vocation or profession.

This means income earned from content work falls under Section 4(a) of the Income Tax Act 1967 gains or profits from a business.

Once something is regarded as business income, the form of payment no longer matters.

2. Income Is About “Value”, Not Just Cash

Many people still think tax only applies to Ringgit and Sen.

That is incorrect.

Under the Income Tax Act, gross income includes gains or profits whether in money or in kind.

LHDN’s guideline issued on 14 January 2026 clearly states that payments to influencers may be received in:

• Cash
• Goods or products
• Services or facilities
• Benefits such as vouchers or discounts

If the item or benefit has market value, it carries tax consequences.

3. When Is a “Gift” Taxable?

This is the key question.

The rule is simple:

• Personal gift
Received with no expectation, no posting, no review, no shout-out.
Usually not taxable.

• Payment-in-kind
Received because the influencer posted, reviewed, promoted or endorsed a brand.
This is taxable.

If you can sell it, it has value. If it was given because of your work, it is income.

Public Rulings used by LHDN have long treated such benefits as perquisites … benefits convertible into money, received in respect of carrying on a vocation.

The guideline simply removes doubt.

4. Why the Grey Area Is Now Gone

Some may ask, “Why now?”

The answer lies in Section 134A of the Income Tax Act.

This provision allows the Director General of LHDN to issue guidelines to clarify how the law applies in practice. The January 2026 guideline is exactly that.

The message is clear : This is no longer an informal or ignored area. It is now a compliance issue.

SME Implications (This Is Why It Matters to You)

If Your Company Engages Influencers

Many SMEs pay influencers using:

• Free products
• Complimentary meals
• Sponsored hotel stays
• Trial services
• Discount vouchers

These are no longer “casual marketing gestures”.

They are non-cash consideration for services.

What SMEs should do:
• Treat influencer campaigns like vendor arrangements
• Define deliverables clearly
• Keep proof of posting and promotion
• Record what was given and why

Your tax deduction is only as strong as your documentation.

Expect Higher Audit Focus

LHDN’s move signals increased attention on this area.

Poor records, missing agreements or unclear valuations can easily turn into disputes, penalties and unnecessary stress.

KTP’s View

At KTP, we see this as a necessary and logical step.

The influencer economy has matured. Tax treatment is simply catching up.

Our advice to SMEs and content creators is practical:

• Separate personal gifts from business rewards clearly
• Track non-cash benefits properly
• Use reasonable market value
• Keep records you can explain calmly

Good tax planning is not about avoiding tax. It is about avoiding surprises.

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