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YouTube: Bad News for Content Creators in India and Other Countries

Google’s recent announcement might come across as “bad news” to YouTube content creators in India and other countries. The search engine informed all YouTubers via email that it will have to cut US taxes from payments to creators outside the United States. This means the US YouTube creators won’t have to bear any extra tax burden. Google may start deducting this additional tax from YouTube creators outside of the US from June 2021.

In its official message, Google said that it would be asking YouTubers to submit their tax information in AdSense over the next couple of weeks. The search giant will use this data to ascertain the right amount of taxes to be deducted, if applicable. Further adding to this statement, the company said in case any YouTuber does not give their tax information by May 31, 2021, it might need to cut up to 24% of their total earnings worldwide.

Here, what’s crucial to understand is that this additional tax will be cut from the money YouTubers make from the viewers in the US through Channel Memberships, YouTube Premium, ad views, Super Stickers, and Super Chat. This means you will not be required to pay any extra tax for your earnings from viewers outside of the US, provided that you submit relevant tax documents on time. However, if you choose to disregard this message from Google and do not provide your relevant tax information, you might need to pay a hefty 24% tax on your total monthly earnings from YouTube.

New Tax Rules for YouTube Content Creators Outside of the US

Using an example, Google clarified that if a YouTuber in India earns $1000 per month from the video-sharing platform and out of that total $1000 revenue, if viewers in the US make up $100 income, then as per the new tax rules, the possibilities are as follows:

  • YouTuber does not provide tax information: In this case, 24% of the entire monthly income, i.e., $1000, will be deducted. Therefore, the final deduction will be $240. That’s because, in case you do not submit a form, the withholding tax rate is up to 24% of the entire income. Hence, until Google receives your complete tax information, it will be required to cut up to 24% of your total earnings worldwide – remember, “worldwide,” not just your US revenue.
  • YouTuber provides tax information and claims a treaty benefit: In this case, 15% of the monthly earnings from viewers in the US, i.e., $100, will be deducted, meaning the final deduction amount will be $15. That’s because of the tax treaty relationship between India and the US that decreases the tax rate to 15% of income from viewers in the US.
  • YouTuber provides tax information but doesn’t qualify for a tax treaty: In this case, 30% of the earnings from viewers in the US, i.e., $100, will be deducted, meaning the final deduction amount will be $30. That’s because, without a tax treaty, the tax rate is 30% of income from viewers in the US.
Wrapping It Up

If you happen to be a content creator earning from the popular video-sharing platform, YouTube, it is in your best interest to look up the Google Support page for relevant tax information and documentation. Also, be sure to submit the same by May 31, 2021. Google has warned YouTubers that if they don’t submit tax forms before the deadline, the tax rate will default to 24% of their entire income for individual account types (which is the account type for most creators) even if viewers from the US account for only a small percentage of their earnings. So, it looks like it would be best for you to play by the rules and submit your tax details on time to avoid a hefty tax deduction.