Your freebie isn’t free: Strategies for turning your brand swag into taxable income

South Africa’s tax authority, SARS, recently clarified that social media influencers must declare all forms of income, including cash payments, free merchandise, and sponsored experiences, as taxable earnings. This move addresses the growing "compliance gap" in the booming influencer economy, where many fail to formalise their earnings as businesses. By enforcing these rules, SARS aims to professionalise the industry, encourage compliance, and level the playing field with traditional media while supporting the national revenue system.

An influencer unboxes a free gadget on Instagram, smiling as thousands of followers tune in. It feels like a perk of online fame. But under South Africa’s tax laws, that “freebie” is income.

Now, the South African Revenue Service (SARS) is making sure content creators understand exactly what that means and requiring them to shift how they consider this in the context of their business.

On 5 September 2025, SARS issued a media release clarifying that all social media influencers must declare their earnings, whether in cash or in kind, as taxable income. Contrary to online chatter, this is not a “new influencer tax.” It’s a reinforcement of long-standing income tax rules: if you receive value for services rendered, you must declare it.

Why SARS is focusing on influencers

The influencer economy has exploded in South Africa. Marketing budgets once spent on traditional media are increasingly flowing to online personalities with measurable reach. Yet, many influencers have been operating informally, with undeclared income creating what SARS calls a “compliance gap.”

Anyone with a sizeable following can become an influencer, and the revenue at stake is significant. If companies can deduct influencer spend as a business expense but influencers don’t declare that same income, the system is unbalanced. SARS is moving to close that gap and secure much-needed revenue.

Influencers are now formally recognised as a distinct taxpayer segment, alongside large businesses, high-wealth individuals, and the gig economy. This recognition underscores that social media influence is no longer a side hustle; it’s a mainstream business.

What counts as taxable income?

According to SARS, all forms of compensation are taxable, including:

Cash payments from brands or agencies
Free merchandise, from sneakers to smartphones
Sponsored trips and hospitality experiences
Services provided in exchange for promotion

Influencers must declare the fair market value of non-cash rewards. That means using the retail price listed by the brand or an equivalent market benchmark – and keeping documentation of how the value was determined.

This isn’t about punishing small gift. It’s about recognising that when you provide a service in exchange for value, whether that’s a handbag or a holiday, you are earning income.

Influencers as entrepreneurs

SARS has made clear that influencers are essentially sole proprietors or freelancers. Their tax obligations mirror those of a photographer, consultant, or writer:

Register as taxpayers (often as provisional taxpayers)
Keep records of all campaigns, invoices, payments, and expenses for at least five years
File tax returns and pay provisional tax where required
Declare both monetary and non-monetary income

What influencers need to do is shift their mindset. Treat this as a business. Set aside funds for tax, consider VAT registration, and consult a tax professional. With the right planning, you can even benefit, claiming legitimate deductions for equipment, travel, or home office costs.

The compliance challenge

It's also worth remembering that most influencers are young and new to financial management.

SARS acknowledges that the burden of self-compliance is heavy compared to salaried workers who have PAYE deducted automatically. To help, they are rolling out educational materials, guides, and webinars to encourage voluntary compliance, something that influencer and media personality Lzasizwe called for in an online conversation about influencer tax compliance.

But enforcement is real. SARS will use third-party data from banks and brands, plus advanced analytics, to match influencer lifestyles with reported income. If there’s a mismatch, audits and penalties could follow.

Impact on the industry

Formal taxation of influencers also stands to reshape the media landscape by:

Levelling the playing field: Traditional agencies already pay tax; influencers must now do the same, reducing unfair advantages.
Pricing shifts: Influencers may raise their rates to cover tax liabilities, especially for non-cash deals.
Payment models: Brands may move towards cash payments rather than gifts, simplifying compliance for both sides.

This could professionalise the industry. Digital creators who adopt business practices – proper invoicing, contracts, and financial planning – will be more attractive to brands and more sustainable long-term.

Addressing the “unfair” argument

South Africa is not alone. In the UK, HMRC requires influencers to declare both cash and barter deals, and the IRS in the US treats gifted products as taxable if received in exchange for promotion. SARS’s stance is in line with these global practices.

This is worth remembering because several influencers claimed it’s unfair to tax gifts when the announcement first made waves. However, employees are also taxed on benefits such as company cars or housing. A free product given with the expectation of promotion is not a gift; it’s compensation. The tax system treats it as such here and abroad.”

What influencers should do now

Register as a taxpayer and check if you qualify as a provisional taxpayer.
Keep meticulous records of campaigns, payments, and in-kind benefits.
Set aside tax savings regularly, including for provisional tax payments.
Consult a tax practitioner for guidance on deductions, VAT, and compliance.
Avoid common mistakes like underreporting non-cash income or missing deadlines