YouTube to cut up to 24% tax from creators outside the US

Google has announced that YouTube creators outside the US will be subject to ‘US tax withholding or deductions’ from the monthly earnings they generate from viewers in the US. The tax regime will come into effect from June 2021.

YouTube has asked creators to provide their tax information in their AdSense account as early as possible.

Google posted on its support forum, “If your tax info isn’t provided by May 31, 2021, Google may be required to deduct up to 24% of your total earnings worldwide. If you’re a creator in the US, you may have already submitted your tax info.”

Explaining the reason behind this tax deduction, Google wrote that it has a responsibility under Chapter 3 of the US Internal Revenue Code to collect tax info, withhold taxes and report to the Internal Revenue Service (the US tax authority, also known as the IRS) when a YPP creator on YouTube earns royalty revenue from viewers in the US.

Google will deduct taxes for not just ad views, but will also include YouTube Premium, Super Chat, Super Stickers and channel memberships, according to a support page.

There will be variation in the deduction of taxes for creators in different countries, depending on the tax treaty relationship between the creator’s country and the US.

The support forum update mentioned that if no US tax info is provided, Google may be required to withhold using the maximum tax rate. The creator’s tax rate will depend on his/her AdSense account type and country:

Business account type: The default withholding rate will be 30% of US earnings if the payee is outside of the US. Businesses in the US will be subject to 24% withholding on total earnings worldwide.

Individual account type: Backup withholding will apply and 24% of total earnings worldwide will be withheld.

YouTube has also created a video to explain the update on tax deduction: