TOKYO (TR) – Prosecutors in Tokyo have indicted influencer Reika Miyazaki for concealing nearly 500 million yen in income by recording fictitious expenses.
According to NHK (Dec. 25), the case typifies the struggles tax authorities endure in monitoring the income of influencers.
Reika Kuroki, who works under the family name Miyazaki, was indicted without detention. The 37-year-old is the representative director of the Shibuya Ward-based advertising agency Solarie.
According to the Tokyo District Public Prosecutors’ Office Special Investigation Division, Kuroki is accused of violating the Corporation Tax Act and the Consumption Tax Act, among other crimes, for concealing approximately 496 million yen in income over the three years up to January of last year.
Kuroki did this by recording fictitious outsourcing expenses, thereby evading approximately 126 million yen in corporate tax and approximately 31 million yen in consumption tax.
Reika Miyazaki
While working as a fashion model and influencer under the name Reika Miyazaki, director Kuroki also started a number of businesses, including a cosmetics sales company and the advertising agency Solarie.
According to sources, Solarie received advertising fees from companies for cosmetics and other products that Kuroki introduced on Instagram. She was paid based on the results of the postings. However, the company recorded fictitious outsourcing fees to make its income appear lower.
Additionally, Yoshihiko Kitajima, an executive at another company run by Kuroki, and Yusuke Aiba, a company executive, have also been criminally charged for aiding in the tax evasion.
The Special Investigation Unit has not revealed whether Kuroki and the others have admitted to the charges.
Kuroki issued a statement saying, “I deeply regret my actions. With the advice of experts, I will promptly make any necessary amended tax returns and file taxes.”
Japan’s No. 1 influencer
On Instagram and Youtube, Kuroki shares her family’s travels to luxury resorts overseas and her daily parenting routine. In her book, she calls herself “Japan’s No. 1 influencer.”
While working as a model, Kuroki started a series of businesses, including a cosmetics sales company and a consulting firm, and was involved in the production of cosmetics and lingerie products.
As an influencer, she amassed over 470,000 followers on Instagram, frequently posting about wearing brand-name products, being invited to luxury brand events, and staying at luxury resorts overseas and in Okinawa.
She appears to have used Instagram to promote products requested by individuals and companies and earned significant advertising revenue through affiliate advertising, which pays commission based on results.
Number one influencer
In 2020, she founded the advertising agency Solarie. According to sources, this agency received advertising revenue from cosmetics and other beauty-related companies.
In a book published two years ago, she wrote, “I consider myself the number one influencer and marketer in Japan. No one understands digital marketing better than I do.”
In addition to sharing the glitzy, affluent lifestyle of an influencer, she also frequently shares her everyday life as a mother of five.
In her book, she states, “The era of ‘looking good’ is over. What I value is sharing the real thing. The most popular thing is my family’s daily life. In a world dominated by what looks good, life-sized content is more popular.”
Leveraging Influencers
With the development of social media, companies are increasingly advertising on the content of highly viewed influencers, which has rapidly expanded the market.
According to a survey conducted by social media marketing company Cyber Buzz and research firm Digital Infact, the market for social media marketing in Japan was estimated at 1.2038 trillion yen last year, growing by more than 10 percent annually.
Of this, the budget spent by companies on social media marketing using influencers was estimated to have reached 86 billion yen last year, a 16 percent increase over the previous year.
According to Cyber Buzz, the rise in users watching videos and other content on social media has led to widespread recognition of influencers, which has resulted in an increasingly powerful influence on people’s consumer behavior.
National Tax Agency investigating
The National Tax Agency (NTA) is actively conducting tax investigations into new economic transactions such as online advertising, considering them an important issue.
According to the agency, over the 12 months ending in June of this year, taxation bureaus across the country conducted 76 tax investigations against individuals engaging in online advertising, such as affiliate advertising, and cited suspicions of malicious fraud.
In 2023, it was reported that an investigation by the Tokyo Regional Taxation Bureau found that nine female influencers had failed to declare a total of approximately 300 million yen in income, according to Yukan Fuji (Dec. 25).
As evidenced by these cases, tax scrutiny of influencers who earn income through social media advertising and other means is becoming increasingly strict.
