If you are a YouTube content creator in Uganda and any other country outside the U.S, you will soon be taxed by YouTube. YouTube will tax content creators outside the U.S in an update where they will be required to offer their tax information to the Google-owned company in order to deduct U.S taxes from the payments to creators. This means that any earnings for Ugandan content creators generated from viewers in the U.S will be subjected to a certain amount of tax as determined by Google.
YouTube will tax content creators outside the U.S as early as June this year
This move could start as early as June 2021 however YouTube content creators are advised to send their tax info to AdSense by May 31st 2021 or risk deductions of up to 24% of their earnings worldwide. After the tax info is submitted, YouTube will determine the correct amount of taxes to deduct for creators outside the U.S like those in Uganda.
A move like this where YouTube will tax content creators outside the U.S can’t go without criticism especially for Ugandans where the cost of internet access is already high. Data bundle rates are usually very high which makes it difficult to maximize the use of the internet. Ugandans are also charged Ott tax to get access to YouTube and other social media platforms which makes the total cost overwhelming. An update like this one goes on to increase the already existing burden for these creators on the platform.
Speaking to Kwikiriza Lynn a YouTube content creator, she explains what this tax means for others like her who go through great lengths to put their content on the platform. “When uploading the videos, you can spend about 2 GB of data minus the hustle of editing and everything else. About the tax, if someone watches your content and they are in the U.S, they’ll tax the revenue you’d have got from the U.S only. If you have a small audience in the U.S then the less the tax and vice versa.”
“People with channels on YouTube earn according to per 1000 views also called CPM. This rate varies for different countries. The reason behind this tax could be because the U.S has been having the highest CPM for a long time. If your audience is mostly from the U.S you earn more money as compared to when your audience is from Africa,” she explained.
The taxes are however justified by Google where it explains that it has a responsibility under Chapter 3 of the U.S. Internal Revenue Code to collect tax info, withhold taxes, and report to the Internal Revenue Service when a creator on YouTube earns royalty revenue from viewers in the U.S. If you have earnings from viewers in the U.S, Google may begin deducting taxes (known as withholding) as early as June 2021.
A video is available to guide people on how to submit their tax info to AdSense on time from YouTube’s support page.
How the tax on YouTube content creators will work
Here’s an example: if a YouTube creator in Uganda in the YouTube Partner Program earns $1,000 USD (Shs 3.7million) from YouTube in the last month. Of the $1,000 USD, their channel generated $100 USD (Shs 370,000) from U.S. viewers. Here are possible scenarios.
- The creator doesn’t submit tax info: the final tax deduction is $240 USD (Shs 878,400) because the withholding tax rate is up to 24% of total earnings worldwide if they didn’t submit tax info. This means that until the creator submits complete tax info, we’ll need to deduct up to 24% of their total earnings worldwide, not just their U.S. earnings.
- Creator submits tax info and claims a treaty benefit: the final tax deduction is $15 USD (54,900). 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.
- Creator submits tax info but is not eligible for a tax treaty benefit: the final tax deduction will be $30 USD (Shs 109,800). This is because the tax rate without a tax treaty is 30% of earnings from viewers in the U.S.