If you are a content producer on YouTube and your channel is monetized, Google will subtract about a quarter of your incomes, up to 24%, in withholding tax from June, the origin company of the world’s biggest video-sharing website proclaimed on Thursday.
To further explain this notion, if your videos receive about 10,000 views, then you can earn $150-200 which in Pakistani currency equals PKR 23,000 to 31,000 depending upon the nature of your content. This is due to the rate generated from the American audience is the second-highest in the world trailing behind Australia.
This means on every 1000 views on a video can earn a content creator $15-20. However, from June (2021) onwards a decrease will be observed in this income because Google has announced on 11th March, that all the monetized YouTube channels in the world having American audiences will be taxed.
In other words, from every $100 earned through the American audience, around $41 would go into the pockets of creators, and in some cases even less, as the amount for FBR tax is not included in it. Annual taxes for FBR sums up to PKR 6,00,000 or a minimum of 5 percent.
As per Google’s announcement, according to the US Laws, it is the responsibility of Google to have the information on the taxes collected from all the monetized channels from all over the world. The implementation of this new law will commence from June 2021, in which the earnings from ad views, YouTube premium, Super Chat, Super Stickers and channel memberships will be taxed. However, not all of these features of YouTube are available in Pakistan, but the channels registered abroad will be categorized in this domain of paying tax on the generated revenue.
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Moreover, Google has requested the creators to update their channel’s respective details on the “Google AdSense” account, consisting of the channel’s registered country. In case of a double tax treaty, the channel will be charged with reduced tax. For instance, India is charged with 15 percent tax as per the treaty, whereas in Pakistan a creator can find its respective applicable tax by accessing tax forms, 1042-S.
However, if the deadline is missed then Google will be charging 24 percent tax on the overall earnings. Well-known Youtubers majorly earn through their sponsored content, they won’t be affected as much as the small-scale Youtubers as their income is based on the ad revenue of YouTube.
Upon asking questions with a spokesperson of the company, the official answered that the tax will be applicable to the creator’s income earned after deducting YouTube’s share. As per statistics, around 45 percent of the earning are taken by YouTube as a share and the remaining 55% is the creator’s earning. Now after implementing the US law, a quarter of the 55 percent will be taken by the internal revenue service of the US.
Therefore, after calculating an estimate it can be said that on every $100, $40 would come into the account of the creator, excluding the local FBR taxes. Moreover, Google has also stated that as the rule will be implemented from June onwards, therefore, previously generated revenues will be exempted.
In conclusion, it can be said that YouTubers currently working on a small scale will be majorly affected. YouTube-based entrepreneurship will decrease, as nowadays more and more people are planning to build their careers through the platform of YouTube.