If you are a creator on YouTube, then there's some bad news for you! From June 2021, the platform will start deducting taxes from creators outside of the United States, on the earnings they make from viewers in the US.
Informing the creators in an email, the Google-owned company has asked them to submit their tax information in Google AdSense, "to determine the correct amount of taxes to deduct". However, this new policy applies to all creators outside the States only. No such deductions will happen for those residing in the US.
On its support page, YouTube explained this decision saying its parent company Google is responsible under Chapter 3 of the US Internal Revenue Code to collect tax information, withhold taxes, and report to the Internal Revenue Service when a creator earns royalty revenue from viewers in the US.
This has resulted in the implementation of the new tax requirements for YouTube earnings.
"Google is required to collect tax info from creators in the YouTube Partner Program (YPP). If any tax deductions apply, Google will withhold taxes on YouTube earnings from viewers in the US from ad views, YouTube Premium, Super Chat, Super Stickers, and Channel Memberships," the company said.
Creators have also been given a deadline of May 31 to upload their tax information on AdSense. Failure to do so might result in a deduction of up to 24 percent of the total earnings worldwide.
The way this will work is- Youtube has a slab of 0-30 percent that it will withhold of the earnings generated from US viewers. The exact percentage will depend on whether the country of the creator has a tax treaty relationship with the US. This means that there will be variation in the deduction of taxes for creators in different countries.
Specifically for India, the withholding rate is set at 15 percent of the total earnings a creator gets from viewers in the US.
Youtube also created a video to explain these new tax deductions and help creators provide their tax information. The company has also tweeted the new rules through its social media channels.
Many creators have criticised YouTube for this move, considering it already takes a cut of revenue from the ads it serves on the platform. The change is also believed to largely affect small creators who don't have millions of subscribers to attract sponsors for native advertisements.
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