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In a bad news for creators in India, Google-owned YouTube has announced to deduct taxes from payments to creators outside of the US.
In an email to YouTubers, the tech giant said that additional tax is going to be levied on them (outside the US) by as early as June 2021.
“Over the next few weeks, we’ll be asking you to submit your tax info in AdSense to determine the correct amount of taxes to deduct, if any apply. If your tax info isn’t provided by May 31st, 2021, Google may be required to deduct up to 24 per cent of your total earnings worldwide,” Google said in the email.
The move will affect YouTube creators’ community in India too.
YouTube has asked creators to submit their tax information to AdSense to understand the correct amount of taxes to be deducted.
For example, imagine if a YouTube creator in India in the Partner Programme earns $1,000 from YouTube in the last month. Of the $1,000, their channel generated $100 from US viewers.
Here are some possible withholding scenarios.
If the creator doesn’t submit tax info, then the the final tax deduction is $240 because the withholding tax rate is up to 24 per cent of total earnings worldwide if they didn’t submit tax info.
“This means that until the creator submits complete tax info, we’ll need to deduct up to 24 per cent of their total earnings worldwide, not just their U.S. earnings,” YouTube said on its support page.
If the creator submits tax info and claims a treaty benefit, then the final tax deduction is $15.
“This is because India and the US have a tax treaty relationship that reduces the tax rate to 15 per cent of earnings from viewers in the US,” YouTube said.
If a creator submits tax info but is not eligible for a tax treaty benefit, then the final tax deduction will be $30.
This is because the tax rate without a tax treaty is 30 per cent of earnings from viewers in the US.
Once Google begins withholding taxes, the creators will see the finalized amount withheld in their regular AdSense Payments Transactions Report.
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