Google has notified all YouTube Content Creators that they will be subject to Withholding tax from their monthly earnings from June 2021.
However, the new policy does not affect US-based creators.
In an email to youTube creators, the online video-sharing platform said
“We’re getting in touch because Google is said to deduct U.S. taxes from earnings to creators living outside of the U.S. this year (as early as June 2021). Over the course of the next few weeks, we’ll be requesting the content makers to submit your tax info in AdSense to decide the correct amount of taxes to deduct if any apply. If your tax details are not submitted by May 31st, 2021, Google may be required to deduct up to 24% of your entire earnings worldwide.”
The tech firm said the taxes would only be deducted on revenue generated from content targeting U.S. viewers.
“Google has a responsibility under Chapter 3 of the U.S. Internal Revenue Code to collect tax info from all monetising creators outside of the U.S. and deduct taxes in certain instances when they earn income from viewers in the U.S.,” it said.
YouTube receives over two billion subscribers each month who watch over one billion hours of videos, translating to billions of views for content creators.
The popularity of content on the platform is based on the views it attracts.
Google said in their update that the company was in the process of updating the terms of service where earnings from YouTube will be considered royalties from a U.S. tax perspective.
This move comes when the Kenya Revenue Authority (KRA) has stepped up efforts to tax businesses operating in Kenya’s cyberspace.
Kenya introduced the Digital Service Tax earlier last year, which applies to companies with a permanent establishment in the country and levies services at the rate of 1.5 t of the gross transaction value.
However, there have been discussions to exempt startups from the payment of the tax.