YouTube is all set to deduct as much as 24% of tax from the earnings of Creators living outside the US.
This news might have come as a shocker to many people. There are 1700+ YouTube Channels by Indians alone with more than one million subscribers. The new law will affect all of them and many more YouTubers from countries around the world.
Google said that the earnings received through viewers from the US (via ad views, Super Chat, Super Stickers, YouTube Premium, and Channel Memberships) will be taxable under US laws.
The tax deductions will start from June 2021 as Google is updating its terms of service for creators outside of the US. This results in the earnings being considered as royalties from the US Tax perspective. The search engine giant mentioned that it has already made the changes to the US creators’ content last November.
That said, YouTubers can reduce the tax percentage by submitting their tax details before 31st May 2021. Those who have done so are eligible for a 15% tax cut instead of 24%. The 24% deduction would be on the total earnings and not limited to the amount earned through US views.
Google has mailed the YouTube Creators to intimate them with the changes in laws and said that they will be asked to submit the necessary tax information to AdSense. Depending on the data submitted, the company will decide if the Creator is eligible for the tax cut or not.
According to the India-US Tax Treaty, the tax deduction rate is 15%. This is said to affect small-time YouTube Creators who don’t have millions of subscribers and a lot of revenue from AdSense.
YouTube also shared the news on Twitter and made a video explaining the new laws. As expected, the company received a lot of criticism for this move. The company maintains that the changes are being made to align their laws with the US laws.
We will soon know the extent to which the new tax laws will affect (small-time) YouTubers from India and other countries.