Youtube To Deduct Taxes Of Up To 24% From Creators Outside The United State.
YouTube has announced that they will begin to deduct taxes from non-U.S.-based content creators on earnings generated by viewers in the United States. The new policy is expected to be implemented from as early as June 2021.
YouTube has asked creators to submit their tax information in AdSense “to determine the correct amount of taxes to deduct” and the company added that creators might see up to a 24-percent deduction from their total earnings worldwide if their tax information is not properly updated by May 31. This will apply to all members of the YouTube Partner Program and a prompt to submit updated tax information through Google AdSense will be sent out over the next few weeks.
Google says the policy was introduced because of Chapter 3 of the U.S. Internal Revenue Code, which mandates that the company deduct taxes from creators when they generate revenue from U.S.-based viewers. Consequently, YouTube will soon update its Terms of Service, and creator earnings – which are typically earned via ads and views, among other revenue streams – will now be considered as royalties.
IMPLICATIONS OF THIS POLICY
Many creators have expressed dismay at the policy, given the fact that the company currently receives about 45% of the revenue from ads creators make on the platform. It also receives about 30% of all Super Chat Donations and Channel Memberships. This new tax policy would mean even less revenue for creators who earn from these 3 revenue streams.
This policy is expected to have adverse effects on creators worldwide as the U.S possesses one of the largest audiences for YouTube viewership. Whatever the size of the deductions that are made on subscriptions, donations and memberships, creators outside of the U.S will most likely lose a significant part of their earnings from the platform.
For countries that possess some form of digital tax, this would amount to double taxation as the individual will have to pay taxes to both their home country and the United States. This does not include countries like the U.K. which has a tax treaty with the United States.
However this story unfolds, we will keep you abreast of the issues regarding this policy as it unfolds.