Influencers also known as social media celebrities are people who have large number of followers on social media and have the capacity to influence this audience and thus have the effect of changing the purchasing decisions of their followers. Viral marketing method is mostly made by the “Influencer”. However, in advertising activities, it is especially necessary to act in accordance with the competition law and to comply with the newly introduced tax regulation. Some of legal regulations regarding advertising and marketing activities carried out through influencers are as follows:
1- Tax Liability
Marketing activities through influencers are subject to income tax in the status of “advertising”, that is, “commercial activity”, because they aim to gain popularity to a brand, a service or a product by using the popularity of influencers with high followers. With the “Communiqué on the Amendment of the General Implementation Communiqué on Value Added Tax” (“Communiqué”) published in the Official Gazette dated 16.02.2021 and numbered 31397, it has been regulated that the VAT withholding application shall be started by the Advertising Agencies or by the commercial advertising service providers. The aforementioned Communiqué entered into force in March. In accordance with the VAT withholding practice, if a customer purchases a commercial advertisement service, he / she shall pay the service provider company, not the whole but part of the VAT on the invoice issued by the company and pay the rest to the state on behalf of that company.
Finally, if these earnings are not taxed at all, both brands and social media celebrities could face massive sanctions.
2- Collaboration Problem
Advertising via Influencer has the characteristics of “commercial advertisement” within the scope of Article 61 of the Law on the Protection of the Consumer. Influencers on social media often state that they use a product and are satisfied, and market the product as “covert advertising”. However, in reality, a fee was taken for this sharing and the influencer got an act in return for this veiled advertisement. This situation is regulated within the scope of Article 61 of the Law on the Protection of the Consumer and it is illegal and prohibited.
In such sharing, if the purpose is to actually advertise, the phrase “ad content” or “collaboration” should be included in a way that can be easily seen by everyone.
In case of violation of the above-mentioned rules, an administrative fine of 114,326.00 TL shall be imposed in 2021.
3- In Terms of Competition Law
Every influencer who posts from social media channels must act in accordance with the “Commercial Advertising and Unfair Commercial Practices Regulation” (“Regulation”) published in the Official Gazette dated 10.01.2015 and numbered 29232. In order to be within the scope of the regulation, in particular, the purchase links of the products and services shall be shared, the notifications directing the purchase shall be made and a “consumer perception” shall be created.
In order to comply with the prohibition of non-competition, it is necessary to include the phrase “advertising content” or “collaboration” in such posts.
Another issue prohibited by the regulation is unfair commercial practices. Unfair commercial applications may also be realized with the Influencer marketing technique.
You may reach the full Turkish version of the said Regulations via the links below: