Should a Web Blogger Be Taxed?
The answer is YES and NO. We could look at this from the angle of the LAW and the angle of the determination based on what ‘mode’ of blogging is in perspective. The first question to ask is, are some bloggers hobby bloggers or professional bloggers?
Empirically speaking, bloggers and freelancers and webmasters and other people who offer specialized online services in different genres may be considered owners of their businesses and/or people who get paid for using their talent and or acquired skill.
Bloggers and webmasters usually earn income from advertising and from selling their services. Other online professionals, such as virtual assistants, social media strategists, SEO specialists, content writers and website designers, usually earn income from selling their services. In this case, bloggers may be considered as self-employed individuals.
It is true that in Nigeria, the Federal Inland Revenue Service (FIRS) is still battling with making e-commerce generally and blogging a taxable means of earning income. There are lots of issues trying to establish whether blogging is seen as a hobby or as a professional means of doing business. But it is also important to note that bloggers do native advertising of products and/or services.
For example, on Linda Ikeji’s blog, a lot of advertising is done for several companies ranging from small businesses to multinational corporations that leverage on the traffic on her page to promote their business concerns. On that count, it will not be fair not to consider that a taxable income, since we have companies whose revenue are stemmed from advertisements.
Further, freelance writers and online professionals may argue that their services are immaterial and, therefore, cannot be taxed. A blog can be seen as a publishing company of some sort, just like a media house that owns print and electronic publishing platforms. In that case, the argument for it being taxable carries the day. Besides, there are offline strategic partnerships that ensue from just promoting a business, from where a blogger earns big.
There is also the direct advertisement angle of blogging. This is a complete taxable income and incurs some tax liability too.
So yes, bloggers are required to pay tax. But that isn’t all there is to it. There are a few pertinent questions and clearances that are critical to the understanding of this discourse.
Let’s get to the difference between a professional and a bobby blogger:
The truth remains that blogging is a painstaking, sometimes difficult venture that requires consistency, persistence, and hard research as well as passion. A lot of people consider blogging to be somewhat of a pastime, but there are levels when it crosses the line and becomes full time and rewarding business. However, this takes time and nurturing.
In the Companies Income Tax Act, Section 9:
The imposition of tax and profits chargeable
Charge of tax
(1) Subject to the provisions of this Act, the tax shall, for each year of assessment, be payable at the rate specified in subsection (1) of section 40 of this Act upon the profits of any company accruing in, derived from, brought into, or received in, Nigeria in respect of‐
(a) any trade or business for whatever period of time such trade or business may have been carried on;
(b) rent or any premium arising from a right granted to any other person for the use or occupation of any property; and where any payment on account of such a rent as is mentioned in this paragraph is made before the expiration of the period to which it relates and is included for the purposes of this paragraph in the profits of a company, then, so much of the payment as relates to any period beginning with the date on which the payment is made shall be treated for these purposes as accruing to the company proportionately from day to day over the last‐mentioned period or over the five years beginning with that date, whichever is the shorter;
(c) dividends, interests, royalties, discounts, charges or annuities;
(d) any source of annual profits or gains not falling within the preceding categories;
(e) any amount deemed to be income or profit under a provision of this Act or, with respect to any benefit arising from a pension or provident fund, of the Personal Income Tax Act;
(f) fees, dues and allowances (wherever paid) for services rendered;
While this may seem confusing to a lot of bloggers out there, simply put this explanation this way, income tax will be levied on any form of trade or business for as long as the business has been carried on over the years.
Therefore, it is important to ascertain whether business transactions are being made, services are being provided, direct advertisements are being done from a blogging platform. This can be used to address the issue of whether a blogger is a hobby blogger or a professional blogger cum business owner.
The following characterization helps to draw the line, however fine, between blogging for fun and making money out of it:
Hobby bloggers do it mainly for fun and leisure, not necessarily for the money. However, money can also come in through Google Adsense and Affiliate Marketing, but it will be limited. On the other hand, business bloggers want to make money through their blogs.
Hobby bloggers may or may not have a specific area of specialization when it comes to topics, but professional bloggers usually focus on niches where they feel more comfortable to blog about, like lifestyle, sport, health, entertainment, politics, etc.