Google to deduct tax from payments to developers of YouTube video

Google-owned YouTube announced that it will deduct taxes from payments to developers of video outside of the US.
YouTube videos
The US-based technology giant in an email to YouTubers said that additional tax is going to be levied on them (outside the US) by as early as June 2021.

“Over the next few weeks, we’ll be asking you to submit your tax information in AdSense  to determine the correct amount of taxes to deduct. If your tax info isn’t provided by May 31, 2021, Google may be required to deduct up to 24 percent of your total earnings worldwide,” Google said in the email to YouTube developers.

The move will affect YouTube creators’ community in India too.

YouTube has asked creators to submit their tax information to AdSense to understand the correct amount of taxes to be deducted.

If a YouTube creator in India in the Partner Program earns $1,000 from YouTube in the last month. Of the $1,000, their channel generated $100 from US viewers.

Here are some possible withholding scenarios.

If the video creator doesn’t submit tax info, then the final tax deduction is $240 because the withholding tax rate is up to 24 percent of total earnings worldwide if they didn’t submit tax info.

This means that until the creator submits complete tax info, we’ll need to deduct up to 24 percent of their total earnings worldwide, not just their U.S. earnings, YouTube said on its support page.

If the creator submits tax info and claims a treaty benefit, then the final tax deduction is $15.

This is because India and the US have a tax treaty relationship that reduces the tax rate to 15 percent of earnings from viewers in the US, YouTube said.

If a creator submits tax info but is not eligible for a tax treaty benefit, then the final tax deduction will be $30. This is because the tax rate without a tax treaty is 30 percent of earnings from viewers in the US.

Once Google begins withholding taxes, the video creators will see the finalized amount withheld in their regular AdSense Payments Transactions Report.

YouTube has generated nearly $5 billion in ad revenue in the last three months of 2020, Google revealed as part of parent company Alphabet’s fourth quarter earnings report.

Google says YouTube generated $15 billion revenue in 2020 and contributed roughly 10 percent to all Google revenue. Those figures make YouTube’s ad business nearly one fifth the size of Facebook’s, and more than six times larger than all of Amazon-owned Twitch.

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