Google has made a new announcement that will be bad news for YouTube content creators in India and other parts of the world. Creators who are not based in the US will be subject to US tax withholding or deductions from their monthly income. The new policy does not affect US creators The additional tax for non-US creators may take effect from June 2021.
Additionally, Google will deduct taxes on YouTube earnings of viewers in the US Not just on ad views, but this will include YouTube Premium, Super Chat, Super Stickers and channel memberships, according to a support page.
Google’s post on the support forum says that “all creators who monetize on YouTube, regardless of their location in the world, must provide tax information. Please submit your tax information as soon as possible. If your tax information is not provided by May 31, 2021, Google may need to deduct up to 24% of your total worldwide revenue. “
Where will the tax be applied?
The amount of tax that will be deducted from the earnings of a YouTube content creator will depend on a few factors. For creators outside the US, submitting your tax information can result in a 0-30% withholding rate on the revenue you earn from viewers in the US. So if you are a creator with a large segment of your audience or viewers in the US, get ready for some YouTube revenue cuts.
According to the support page, “If you submit US tax information, the retention rates are between 0 and 30 percent of the revenue you generate from viewers in the US. And it depends on whether your country has a tax treaty relationship with the United States. “
Creators based in the US will not be subject to withholding tax if the creators have provided valid tax information. If US tax information is not provided, Google may deduct based on the maximum tax rate, which again will depend on the type of AdSense account and the creator’s country.
How Holdings Will Affect Accounts If US Tax Information Is Not Provided.
If your creator account is classified as a business account, the default retention rate will be 30% of US viewers’ earnings.
If your creator account is classified as an individual account, a backup withholding will apply and you will pay 24% of total worldwide earnings.
Google has also mentioned in their official post that “these retention rates will be adjusted in the next payment cycle once valid US tax information is provided in AdSense.”