YouTube Content Creators In Trouble As Google Shares Shocking News - Newslibre

YouTube Content Creators In Trouble As Google Shares Shocking News

Google recently revealed some shocking news that is aimed at YouTube content creators and is seen as a ‘bad move’ which gravely affects anyone planning on making money out of the platform.

An email was sent out by Google to all YouTube content creators, especially those who live outside of the United States on Tuesday notifying them of a change to YouTube’s payments. The email was definitely a shocker.

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.

It is understandable that Google is required by law to collect these taxes, however, this move is only going to cripple those content creators who are outside the United States given that some countries have unfair taxing systems and will limit the income they can save aside from content published online.

What to expect from the YouTube taxes

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.

Uganda, despite its relationship with the United States, there seems to be no conclusion on whether the country has a tax treaty with the superpower. As seen on the IRS website, Uganda isn’t listed anywhere under the list provided.

This change will impact 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.

The new changes will soon be added to the Terms of Service, and creator earnings which are typically earned via ads and views, among other revenue streams will now be considered as royalties.

Users of the platform will be required to submit their relevant tax info via AdSense by May 31, 2021, so that Google can correctly calculate their tax deductions (if any). The tech giant also set up a support page to clear some of the confusion which also contains a sample calculation.

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 taxing YouTube earnings may cripple many content creators outside the United States

YouTube Content Creators In Trouble As Google Shares Shocking News - Newslibre
FILE PHOTO: REUTERS/Dado Ruvic/Illustration/File Photo

According to Nairobi News, 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:

If the creator doesn’t submit tax info: The 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.

If the creator submits tax info and claims a treaty benefit: The 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.

Uganda has no tax treaty with the US and we confirmed this from the IRS website. This means that Ugandan content creators a more likely to face higher taxes and also the fact that citizens have a negative perception of the country’s taxation system, they’re likely to give up on the platform altogether.

To put it simply, when a Ugandan content creator submits tax info but is not eligible for a tax treaty, the 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.

Google has promised to reveal more details about this change, along with responses from the creators who this will impact over the next few days.

What are your thoughts on this new change? And how do you plan to react to it given the fact it is soon going to take effect. Let us know your opinions in the comment section.

 

Check out: How Educational Apps Are Changing The System During Covid-19

YouTube Content Creators In Trouble As Google Shares Shocking News 1

Author: Allan Bangirana

Allan Bangirana has a taste for all kinds of topics and usually writes about tech, entertainment, sports and community projects that make a difference in society.

He writes for Newslibre and Spur Magazine. He is also the co-founder of the Innovware project and a freelance consultant passionate about technology and web.

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