Google shares ‘bad news’ for YouTuber content creators
Google has just made an announcement that is bound to make YouTubers a bit poorer in Kenya and other regions.
In an email going out to YouTube content creators, who live outside of the United States on Tuesday, the platform owned by Google notified them of a change to YouTube’s payments.
Google said that it is now required to deduct taxes for the US government from all channels, even those owned by creators who don’t reside in the United States of America.
“We’re reaching out because Google will be required to deduct U.S. taxes from payments to creators outside of the U.S. later this year (as early as June 2021). 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 31, 2021, Google may be required to deduct up to 24 percent of your total earnings worldwide,” it read.
Google has the responsibility to collect tax information from all monetising creators outside of the US and withhold taxes when income is earned from viewers within the US.
What is important to understand is that the tax will be deducted from earnings from viewers in the US through ad views, YouTube Premium, Super Chat, Super Stickers, and Channel Memberships.
“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 percent of your total earnings worldwide,” it added.
Creators outside of the U.S, if they submit U.S. tax info, withholding rates are between 0-30 percent on earnings you generate from viewers in the U.S. and it also depends on whether your country has a tax treaty relationship with the US.
This change will impact on thousands of creators since the US is one of the biggest markets for YouTube viewership.
According to Google, this is because of Chapter 3 of the US Internal Revenue Code, which mandates that the company deducts taxes from creators when they generate revenue from US-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 which will now be considered as royalties.
Google has set up a support page to clear some of the confusion which also contains a sample calculation.
One will need to submit their relevant tax info via AdSense by May 31, 2021, so that Google can correctly calculate their tax deductions (if any).
If one fails to provide this info by the stipulated date, they may be subject to a higher tax of 24 percent for their total YouTube earnings.
Google with an example explained that if a content creator in Kenya made Sh100,000 ($1000) in revenue from YouTube in the last month, of the Sh100,000 in total revenue, their channel generated Sh10,000 ($100) from US viewers this will be some possible withholding scenarios:
The 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 percent of total earnings. This means that until Google has your completed tax info, they will need to deduct up to 24 percent of your total earnings worldwide – not just your US earnings.
Creator submits tax info and claims a treaty benefit: Final tax deduction is $15. This is because your country and the US have a tax treaty relationship that reduces the tax rate to 15 percent of earnings from viewers in the U.S.
Creator submits tax info but is not eligible for a tax treaty: Final tax deduction is $30. This is because the tax rate without a tax treaty is 30 percent of earnings from viewers in the U.S.
Google already keeps around 45 percent of all revenue generated through ads on all videos.
With this new tax deduction, creators outside of the US will now see even less of the money from YouTube’s revenue system.
More details about this change, along with responses from the creators who this will impact, are going to be released over the next few days.