YouTube has announced plans to deduct US taxes from all creators, including those outside the region. This will only affect the revenue generated through US viewers. Kenya has a lot of bloggers and content creators who will definitely be affected by this new change.
The company sent out an email to partner creators notifying them of the changes.
“We’re reaching out because Google will be required to deduct U.S. taxes from payments to creators outside of the U.S. later this year (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% of your total earnings worldwide.”
The change is in accordance with Chapter 3 of the US Internal Revenue Code which gives Google the responsibility to collect taxes from all monetizing creators outside of the US and collect taxes from revenue generated from US creators.
This means that not all revenue will be affected but only that which is generated from US viewers. Google explained this quite clearly on their support page.
“Example: A Creator in India earns $1,000 in revenue from YouTube in the last month. Of the $1000 in total revenue, their channel generated $100 from U.S. viewers.
Here are some possible withholding scenarios:
- Creator doesn’t submit tax info: Final deduction is $240 because the withholding tax rate, if you don’t submit a form, is up to 24% of total earnings. This means that until we have your completed tax info, we’ll need to deduct up to 24% of your total earnings worldwide – not just your U.S. earnings.
- Creator submits tax info and claims a treaty benefit: Final tax deduction is $15. This is because India and the U.S. have a tax treaty relationship that reduces the tax rate to 15% of earnings from viewers in the U.S.
- Creator submits tax info, but is not eligible for a tax treaty: Final tax deduction is $30. This is because the tax rate without a tax treaty is 30% of earnings from viewers in the U.S.”
Creators should therefore submit their tax info by end of May to avoid the 24% cut. The changes do not affect content creators in the US.