This morning, we noticed that some of our Malaysian media content creator friends receiving an email from YouTube. It appears that the company will begin deducting US taxes from June 2021 from payments to creators outside of the country. How much? According to the email, it may go up to 24% of the creator's total earnings worldwide.
In YouTube's defence in the email, they said that Google was asked to do so (and probably ordered by the US government). With this, content creators outside of the US will need to submit their tax info in AdSense to determine the correct tax figure deduction. If the content creator fails to submit his or her tax info by 31 May 2021, Google may deduct up to 24% of the earnings as aforementioned.
To give you a better picture, Google also provided an example of how this would impact the content creators who aren't living in the US:
- A creator in India earns $1,000 in revenue from YouTube in the last month. Of the $1000 in total revenue, their channel generated $100 from U.S. viewers.
- Possible scenario 1 - 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% of total earnings. This means that until we have your completed tax info, we’ll need to deduct up to 24% of your total earnings worldwide – not just your U.S. earnings.
- Possible scenario 2 - Creator submits tax info and claims a treaty benefit: Final tax deduction is $15. This is because India and the U.S. have a tax treaty relationship that reduces the tax rate to 15% of earnings from viewers in the U.S.
- Possible scenario 3- 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% of earnings from viewers in the U.S.
A quick Google check would show you that Malaysia and the US do not have a Tax Treaty. That means for Malaysian YouTubers (say if you earn $100, ~RM412), our scenario falls on number 3 - a $30 tax deduction which is roughly around ~RM123. If you don't submit your tax information, then you would only earn $76 (~RM313). However, keep in mind that if you don't have a lot of American viewers, you are mostly safe.
Since this will affect content creators outside of the country, that means those who are American citizens aren't charged for taxes. What do you think of this issue? It's certainly quite a hefty tax pay especially for a country like ours with lower currency exchange. Let us know in the comments below and stay tuned for more trending tech news at TechNave.com.
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