Recently, the search engine giant Google announced that it would begin deducting United States of America (USA) taxes from payments to YouTube creators as early as June 2021 from creators outside of the USA.
Earnings from viewers in the USA through ad views, YouTube Premium, Super Chat, Super Stickers, and Channel Memberships will be taxable.
Google said it would soon be updating its terms of service for creators outside of the US, where your earnings from YouTube will be considered royalties from a USA tax perspective. Adding that they had already made this change to US creators terms of service in November last year.
“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,” Google said in an email to creators. Google AdSense program allows a faster and easier way to display relevant Google ads on your result pages
The move will impact the earnings of the YouTube creators’ community in India and other countries too. There are more than 1700 Indian YouTube channels with more than 1 million subscribers as per the latest data.
The streaming giant YouTube has asked creators to submit their tax information to AdSense to understand the correct amount of tax deductions. To explain further, the company gave an example that if a creator in India earns $1,000 in revenue from YouTube in a month. Of the $1000 in total revenue, their channel generated $100 from US viewers.
Then these are the possible withholding scenarios:
Case 1:- 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 Google has your completed tax info, Google will deduct up to 24% of your total earnings worldwide – not just your US earnings.
Case 2:-Creator submits tax info and claims a treaty benefit: Final tax deduction is $15. This is because India and the US have a tax treaty relationship that reduces the tax rate to 15% of earnings from viewers in the US
Case 3:-Creator submits tax info but is not eligible for a tax treaty: For creators falling in this category the final tax deduction will be $30. As the tax rate without a tax treaty is 30% 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.
What Indian creators need to do now?
Google’s post on the support forum says that “all monetizing creators on YouTube, regardless of their location in the world, are required to provide tax info. Please submit your tax info as soon as possible. If your tax info isn’t provided by May 31, 2021, Google may be required to deduct up to 24% of your total earnings worldwide.”
All Indian creator must submit their tax info by May 31,2021 positively