A YouTube creator from outside the United States could soon see up to 30 per cent of their earnings on the platform generated from US viewers being withheld as tax. The Google-owned video service has asked its creators to submit their tax information so that it could be determined if there is any tax incidence on their earnings from US viewers and how much. This would impact creators under YouTube Partnership Program across the world, including in India, starting June this year.
“Under US tax law, Google is required to withhold taxes when non-US creators earn income from viewers in the US. We are asking creators to submit relevant tax information to determine whether any US withholding taxes apply and where applicable, we will withhold US taxes from creators’ earnings beginning later this year,” a YouTube spokesperson said. The company has asked its creators to submit information, including their tax identification numbers and estimated revenues from the US, by May 31.
While the tax ranges from 0-30 per cent depending on factors such as nature of creator — individual or organisation — and various tax treaties that the US has with other countries, failure to submit the tax information within the stipulated time-frame would mean that Google would assume the creator to be a US citizen and withhold 30 per cent of their earnings, which is the highest bracket.
According to YouTube, the tax withholding rate on royalties for valid claims made under India’s tax treaty with the US is 15 per cent. The same for the UK and Canada is set at 0 per cent, and for South Korea and Mexico at 10 per cent. The platform said that Google has a responsibility under Chapter 3 of the US Internal Revenue Code to collect tax information from all monetising creators outside of the US and withhold taxes in certain instances when they earn income from viewers in the US.
For example, if an Indian creator, who is part of the YouTube Partnership Program earns $1,000 a month from their content on YouTube, and of this, $100 is earned from US viewers, tax will only be withheld on this $100. This revenue could be earned from any of YouTube’s monetising tools such as YouTube premium, super-chat, super-stickers, and channel memberships.
Even as this stands to impact a large number of YouTube creators, including within India, the individual impact on most Indian creators is not expected to be major, a company executive said, suggesting that a majority of the earnings generated by India-based creators are from Indian viewerships.