For many years people have quit their jobs to pursue a career as a content creator on YouTube. Some have achieved incredible things and it’s hard not to feel the pangs of jealousy when you realise folks are making money while having fun.
That’s not to say making and publishing videos is easy, it isn’t. However being able to be paid for your work helps you push through those long editing sessions.
But things are about to get a lot more complex if you are a local YouTuber that is earning money on the platform.
In a video published earlier this week, YouTube Creators detailed some changes being made to how creators outside of the US will earn their money.
“If you’re a creator outside of the U.S., you may begin to have taxes deducted from your U.S. earnings later this year (2021). Google has a responsibility under Chapter 3 of the U.S. Internal Revenue Code to collect tax information from all monetizing creators outside of the U.S. And, in certain instances, to deduct taxes when these creators earn income from viewers in the U.S. These U.S. earnings can come from ad views, YouTube Premium, Super Chat, Super Stickers, and Channel Memberships,” YouTube explains.
Creators will need to head to their Google Adsense account and complete a questionnaire. This questionnaire will help determine what form you will need to complete.
This form is named W-8BEN, for individuals and W-8BEN-E for companies. The forms are very different so be sure to select the correct one. YouTube recommends contacting a tax advisor if you aren’t sure.
“Even if you’re paid by a multi-channel network, you will still need to submit your tax information in the AdSense account that’s linked to your channel,” said YouTube.
Now, before we dive into the various problems here we should point out that you will only be taxed on revenue you earn from ad views, YouTube Premium, Super Chat, Super Stickers, and Channel Memberships in the US. So if your viewership is 100 percent from Africa (very strange if that is the case) you won’t be taxed by YouTube when you receive your AdSense payment.
The amount you will pay is determined by your withholding rate. This rate can range from 0 to 30 percent and it is determined by the the W-8BEN or W-8BEN-E for you submit as well as the country you are in.
So, if you earn $100 from views in the US, you will now have to pay $30 at a withholding rate of 30 percent.
What happens if you don’t submit those forms though?
Well, then YouTube says it will be forced to assume you are a US citizen and until such time as you submit the relevant form, YouTube will withhold 24 percent of your global earnings.
Some creators may benefit from a tax treaty if they live in a country which has one with the US.
Does South Africa have a tax treaty with the US? No and the reason for that is, Apartheid.
“Currently, there is no income tax convention between the United States and South Africa. The income tax convention between the United States and South Africa of December 13, 1946 was terminated July 1, 1987, pursuant to the terms of that convention and Section 313 of the Comprehensive Anti-Apartheid Act of 1986,” reads the Tax Convention with South Africa from 1998.
How much tax will be withheld from local creators is unclear at this stage.
In fact, YouTube’s video announcing these changes isn’t all that clear either and as such we’ve asked the local representation for YouTube to provide us with greater detail about what this means for South Africa.
With that having been said, this announcement is not going down well. The video currently has a ratio of 4.1K likes to 4.7K dislikes.
Creators are concerned about being taxed twice (once in the US and a second time in their country of residence) and rightly so.
One creator even suggests YouTube allow uploaders to restrict their content from being shown in the US. This sounds strange but services like Netflix and YouTube itself limit what content can be viewed in certain countries.
Creators are incredibly upset though and the prospect of having to deal with the USA’s incredibly confusing tax system is not helping.