How much would YouTubers lose as taxes to Google under new rule?
While there is no way to escape the tax, an alternate content plan could help YouTubers, say experts
The news of YouTube planning to deduct taxes from its content creators has led to considerable heartburn in the community. Though tax would be deducted only on the views that come from the American audience, this would result in up to 24% revenue loss from one of the most lucrative markets for the YouTubers. According to experts, the move is a huge setback for content creators in the country.
Why YouTube matters?
“YouTube is one of the biggest entertainment and content creation platforms in the world. In India, Youtube content creation has seen exponential growth in the past few years. YouTube has over 265 M+ monthly active users in India and multiple influencers from all around the world have 8.1% Indian audience viewership. Thousands of Indian Youtube creators have crossed significant milestones. There are so many creators that the platform has given birth to and we have seen many who are constantly hustling and thriving for YouTube only,” said Prasiddhi Kapasi – India Manager, WIBA, an influencer management company.
“The most impacted will be those who serve a global audience, as the tax is applicable on ad revenue share and other earnings from the YouTuber's views coming from the US,” said Siddharth Devnani, Co-founder, Director at digital management agency SoCheers.
The earnings would include earnings from viewers in the U.S. through ad views, YouTube Premium, Super Chat, Super Stickers, and Channel Memberships.
In an official statement last week Google said, “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% of your total earnings worldwide.”
Explaining the damages after the implementation of this new rule Kapasi said, “The exact percentage will depend on various factors such as viewership generated from the US by the individual creator and whether the country of the creator has a tax treaty relationship with the US. The withholding rate for Indian creators is set at 15 per cent of the total earnings a creator gets from US viewers
Depending on the views generated, Youtube has a 0-30% slab which will be deducted from the earnings based on the views and engagement from US viewers. The impact on each creator will vary depending on their engagement with the US audience.
“Views generated from the US earn up to 6 times more revenue. A lot of YouTubers create content across genre for the global audience targeting not just the expat population but the overall audience. The move is expected to bring down all their revenues substantially,” said a digital expert.
While there is no way out to escape the tax, an alternate content plan could help YouTubers, said experts.
“This is a new tax policy announced by the platform officially so a way out would only be if the platform announces one. However, in order to avoid this, creators may focus on trying to create content which is of national interest or in local languages which is something that has also seen a growth over the past few years and is appreciated by the Indian audience,” said Devnani.
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