New Rules
For the YouTube creators outside of the U.S., important tax changes are incoming this year that may affect their earnings. What are the new tax rules?
YouTube has recently announced additional tax requirements for creators outside of the U.S. on their earnings from U.S. viewers. The company may begin withholding U.S. taxes on earnings generated from viewers in the U.S. as early as June 2021. It has asked the creators to submit their tax info by May 31, 2021, in AdSense to check if they are eligible for these new changes.
If the tax deductions apply, Google will deduct (known as withholding) taxes on YouTube earnings from viewers in the U.S. from ad views, YouTube Premium, Super Chat, Super Stickers, and Channel Memberships.
Why is it doing so? The company said that it has the responsibility to collect tax info, withhold i.e., deduct taxes, and report it to the U.S tax authority when a YouTube Partner Programme (YPP) creator on YouTube earns royalty revenue from viewers in the U.S.
For the non-U.S. creators
The tax rates will be between 0%-30% on earnings creators generate from viewers in the U.S. If one fails to submit the info by the mentioned deadline, Google may be required to deduct up to 24% of their total earnings worldwide, it said.
The requirements can differ depending on the creator’s country of residence, and on aspects like whether they are eligible to claim tax treaty benefits that the countries have, or whether they identify as an individual or a business.
For Indian creators, they may have to pay around 15% of their YouTube ad revenue coming from their U.S viewers based on the Double Tax Avoidance Agreement or DTAA between India and the U.S. Also, the majority of Indian creators have more of a local audience base.
Experts as per various news reports have stated that YouTubers in India who create content in English have a slight to a significant portion of their viewership in the U.S and they will be impacted by the new changes. Some music labels business accounts may also be impacted as they get significant ad revenue from their U.S. viewership.
As far as the U.S. creators are concerned, the statement said that Google will not withhold taxes on earnings if they have provided valid tax info as most of U.S. creators already have submitted their tax info. So, seeing this move as only targeted to the non-U.S. creators would not be right as per the U.S. tax law, the company is supposed to charge creators who earn from their viewership in the country, so this in the end should impact the U.S. creators too.
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