YouTube recently announced that taxes of between 0% to 30% will be deducted from the US earnings of creators living outside the country. This is applicable for creators under the YouTube Partner Programme, which requires creators to have more than 1,000 subscribers and more than 4,000 valid public watch hours in the last 12 months. This will mean that creators in Singapore and Malaysia, for instance, are required to pay the full 30% since both countries do not have tax treaties with the US. YouTube's parent company Google previously explained that it has a responsibility under Chapter 3 of the US Internal Revenue Code to collect tax info from all monetising creators outside of the country and withhold taxes in certain instances when they earn income from viewers in the US. These are earnings from viewers in the US through ad views, YouTube Premium, Super Chat, Super Stickers and Channel Memberships.
Nonetheless, YouTube content creators who MARKETING-INTERACTIVE spoke don't seem to be rattled. Singaporean YouTube content creator and CEO of Titan Digital Media JianHao Tan (pictured left) said for the past few years, the company has paid tax for its total YouTube ad revenue income - hence this will be a slight change. Tan has 4.63 million subscribers on YouTube and according to him, many of them come from the US (19%), contributing 40 to 50 million monthly views.
While the latest tax update has not rang alarm bells for Tan, he said the concern from some creators is getting double taxed in both the US and their home countries. "I am aware that Singapore has an avoidance to double tax agreements (DTAs) to prevent double taxation. So it is important for creators to take the 30% US tax into consideration," Tan said. According to the Inland Revenue Authority of Singapore's (IRAS) website, Singapore has an exchange of information agreement with the US, which states that both countries shall provide assistance to each other through exchange of information that is "foreseeably relevant to the administration and enforcement of the domestic laws of the parties concerning taxes covered by the agreement".
"Such information shall include information that is foreseeably relevant to the determination, assessment and collection of such taxes, the recovery and enforcement of tax claims, or the investigation or prosecution of tax matters," the agreement on the IRAS website said. Meanwhile, Tan said the tax update will not impact its relationship with brands since it conducts its business in Singapore. "As Titan Digital Media is a GST registered company, there is a 7% GST fee tagged to the services and work we provide. Over the past years, all brands have been compliant with this so it is all good," he added.
Similarly, Malaysian content creator Jin Lim (pictured right), also known as Jinnyboy, said this is not huge news because if a creator's viewers are from the US, he or she needs to pay taxes according to US law. "I was not particularly shocked. We have submitted withholding tax forms before. We were once with a multi-channel network and they handle our [overseas] taxes and thereafter, we get our revenue. That's when we declare our taxes in our country," he explained. JinnyboyTV has 1.13 million YouTube subscribers and Lim said 12.3% of them are from the US, placing it among the top three countries. According to him, one of the videos which did exceptionally well among US viewers was titled Asian Parents of the Future. Launched on September 2019, it has since accumulated 1.2 million YouTube views. Another popular video among US viewers was its 2021 Chinese New Year video The Last Dance, which racked up 270k views.
"Regardless, we declare it as our company funds and we pay taxes according to our local law. If people are viewing your videos in the US, it's like you are doing business there," he explained. However, Lim clarified that his revenue does not fully come from AdSense. Last year, he established a new creative production agency named Aspect Ratio Studios which he describes to be a hybrid between a production house and a social media agency. The team wanted to diversify its offerings and not just be seen as individuals who are only good at creating YouTube videos, but are also adept at producing branded content and commercials.
That said, on the issue of double taxation, a check by MARKETING-INTERACTIVE Inland Revenue Board of Malaysia's website found that the country has a double taxation agreement with the US for shipping and air transport companies only. Separately according to YouTube, the Terms of Service for US creators were update since last November. The new terms state that any payments they may be entitled to receive from YouTube under any other agreement between the creator and YouTube will be treated as royalties. If required by law, Google will withhold taxes from such payments.
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