Blog

Tech giant Google — YouTube’s parent company — has announced that it may deduct up to 24 percent tax on YouTube earnings for creators outside the United States. However, this only applies to the earnings they make from viewers in the United States. The deductions will start as early as June 2021.

The tech giant has also said that this includes earnings from YouTube Premium, ad views, super chat, super stickers, and channel memberships.

In an official communication, Google said, “All monetising 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.”

Explaining this decision, YouTube said that Google is obliged under Chapter 3 of the US Internal Revenue Code to collect tax info and withhold taxes. In fact, it must report to the Internal Revenue Service — the American agency responsible for the collection of taxes and enforcement of tax laws — when a YouTube creator earns royalty revenue from viewers in the country.

How to update your US tax information

YouTube creators need to submit their US tax information on the Google AdSense page. Here’s a step-by-step method that creators need to follow:

• Sign in to the Google AdSense account.
• Click on payments.
• Click on manage settings.
• Scroll to payments profile, and click edit next to United States tax info.
• Click manage tax information.
• Fill in the required details.

Creators may need to re-submit taxation information every three years. Moreover, only Latin characters can be used when submitting tax forms. Creators can see the finalised amount withheld in their regular AdSense payments transactions report.

How does this impact Indian YouTubers?

Every YouTube creator — regardless of their location — is required to provide US tax information to Google. The tax withholding requirements can differ depending on the country of residence and whether the creators are eligible to claim tax treaty benefits.

India and the US have a tax treaty relationship, which pegs deductions at 15 percent of the earnings. Say, if a creator has a monthly income of $1000 from a YouTube channel, of which $100 comes from the US, and if they have submitted the tax information, the deduction will stand at $15 (15 percent of $100).

However, if Indian YouTubers have not submitted the details, the deduction will stand at $240, that is, 24 percent of the total earnings, and not just the US earnings.