Youtubers outside of the United States will now face a double whammy of tax deductions if a portion of their viewers are based in the US. This is true of many South African content creators who tend to make English videos because… well… they’re English.
According to a video published by YouTube this week, the company is shaking up its taxation rules to comply with Chapter 3 of the US Internal Revenue Code. Under this code, its got a responsibility to collect tax information, withhold taxes and report non-compliance to the IRS when a creator earns royalties from US-based viewers.
YouTube’s double-billing
That means that many creators will pay tax in two countries: their home base and the US. The video uploaded as a ‘how to’ details how video creators should go about signing up for US tax through their AdSense accounts. Remember, this is only relevant if you actually make money from ads. If you do, head over to the video with all the info.
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The changes come into effect come 31 May, so get your tax info into AdSense before then, or the company will have the ability to withhold 24% of the US-based earnings from an account. If you go ahead and enter your tax information correctly, you’ll be liable to pay anything between 0-30% in tax based on your country of origin and how many US-based viewers you have.
It's official, even though I pay tax on my US earnings in South Africa, I'll now need to pay US taxes on the US views my channel makes 🙃
That makes sense
— Mister Flak (@MisterFlak) March 10, 2021
A change like this could have an adverse effect on the earnings of people who rely on YouTube as a main source of income. YouTube’s majority viewership overall is in the US, so this change affects a large group of creators. It also looks like the change will largely affect small creators who don’t have millions of subscribers to attract sponsors for native ads.