Google-owned YouTube will start making tax deductions on the earnings of content creators outside of the US from June if they are generated from viewers in the country, the company said.
"These are earnings from viewers in the US through ad views, YouTube premium, super chat, super stickers and channel memberships," Google said in a statement.
The California-based video platform set a May 31 deadline for all creators to submit relevant tax information so that the company can determine the correct amount of tax. Those who don't submit the required information will face a deduction of up to 24 per cent of a creator's global YouTube earnings.
If users provide tax information, the tax withholding rate will be settled between 0 per cent and 30 per cent of monthly US earnings, Google said. The withholding rate depends on whether the home country of the user has a tax treaty with the US or not.
For example, an Indian creator, who submits tax information and claims a treaty benefit, will be subjected to 15 per cent tax deduction of their earnings from the US viewers. Whereas, for creators not eligible for tax treaty benefits, the tax rate would be 30 per cent of earnings from viewers in the US.
Google said it is obliged to carry out the tax deduction as it has a responsibility under Chapter 3 of the US Internal Revenue Code to collect tax information from all monetising creators outside of the US and withhold taxes in certain instances when they earn income from viewers in the US.
Over the past five years, the company has paid more than $2 billion to creators who have chosen to monetise using Content ID, the company said. There are 9,000 creators using Content ID, including many major network broadcasters, movie studios and record labels.
“For creators outside of the US, we will soon be updating our terms of service where your earnings from YouTube will be considered royalties from a US tax perspective … this may impact the way your earnings are taxed, and as required by US law, Google will withhold taxes,” it added.
Founded in 2005, YouTube has launched local versions in more than 100 countries and its content is available in over 80 languages. It has nearly 2 billion logged-in users each month, and every day people watch over a billion hours of video and generate billions of views, the company said.
Google has also developed a tool called Content ID that is a digital fingerprinting system used to manage the content on YouTube.
