Tax Evasion Crime Warning for Social Media Ads

Social media ads can create tax bugs
Social media ads can create tax bugs

Hunting. Emre Avşar Warned Social Media Phenomena and Companies; "You can commit the crime of tax evasion, you can get fines for violating the advertising competition law!"

Prof Law Firm Lawyer Att. Emre Avşar warned influencers, phenomena and celebrities who advertise with their followers on social media channels. Including the companies that make the advertisements to these warnings, Av. Emre Avşar drew attention to the Regulation on Commercial Advertising and Unfair Commercial Practices and explained the incorrect practices in Social Media channels regarding both advertising bans and violation of the tax procedure law.

Through short-term "stories", we witness that celebrities encourage people to shop from these links by giving them a "consumer perception" by sharing "links", which are the extension of the product or service, instead of an open advertisement on social media. As this is intended to gain popularity for a brand, a service or a product by using the popularity of celebrities, it will be subject to income tax, as it has the status of “advertising”, hence “commercial activity”. If these earnings are not taxed, it may lead to large criminal sanctions for both brands and social media celebrities. In other words, it is highly possible that even Tax Evasion Crime will occur.

In fact, a group of social media users claiming that the Influencers gained unfair and tax-free income with a campaign on this issue, started to complain to CIMER by organizing a petition.

Hunting. Emre Avşar's statements and statements are as follows; “Today, traditional advertising & marketing has been replaced by the development of interactive media, especially social media networks. YouTubeWe see that applications such as Twitter, Instagram, Facebook and TikTok are taking over. One of the biggest reasons for this is that brands can reach a wider audience on social media and are relatively less costly and less laborious than traditional advertising activities such as billboards, brochures and TV advertisements.

Brands that develop an integrated advertising strategy with digital transformation also include celebrities with millions of followers, subscribers, YouTubeThey prefer rs, athletes and influencers to advertise their products or services. Consequently, these people can earn an amount of income that we can talk about being serious through social media, which is used as a communication channel.

Of course, there is nothing wrong with making such an advertisement. However, we cannot say that it is correct for these people to pretend to be a normal social media post without making a statement such as “sponsored” or “product promotion” in their own posts while promoting their products or in a field that appears.

When we look at the examples in developed countries, we see that it is stated by the celebrities who share this style in the description part of the sharing that the sharing is an "advertising content". Although this situation is governed by a regulation in our country, unfortunately, the postings with advertising content are made as if they were ordinary shares. So there is no mention of being an advertisement.

According to the Commercial Advertising and Unfair Commercial Practices Regulation numbered 01.01.2015 dated 29232, it should be clearly stated that there is advertising content in the shares that are published on the internet. Failure to comply with this also has serious penal sanctions.

Although there are certain reasons for this, the most important reason is to avoid the taxation of the advertising earned within the scope of Tax Law.

However, it should be known that according to the Income Tax Law No. 193; It is considered as "commercial gain".

In other words, the effect of social media celebrities on the product with the number of followers and popularity is made with the intention of gaining popularity for that product or service. Regardless, these types of posts are posts that are clearly understood to generate advertising revenue. Therefore, the earned income must be made under a contract and the earnings must be taxed.

Since it is clearly understood that these earnings are in the status of “commercial gain”, we can mention that not being taxed would constitute a violation of the Tax Procedure Law. In this case, the possibility of encountering high fines may arise.

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