Explainer: Why non-US YouTubers to pay taxes to US and how much?

Google, the parent company of YouTube, has been restricted by its home country the US to furnish tax information of all those content creators whose channels have been monetized by the largest video sharing platform for the revenue they generate via audience within the US.

When the tax information and revenue reports are updated to Google’s AdSense, the Internal Revenue Code of the US will levy taxes on the income generated within the region and in doing so, the content creators outside of the US, depending upon their country’s relationship with America, will have to pay withholding tax on that revenue.

Let’s say if the content creator is based in Pakistan and his videos get audience in the US, he will be taxed only on the amount of revenue that US audience garners for this content creator.

The highest amount of withholding tax his US revenues may be subjected to is 30 per cent for international profit accrued by a non-national, and the lowest depends upon the double tax treaty (if) the US has with this country and thus a zero per cent tax is the lowest – as is the case with Canada and the UK.

However, there’s a hiccup in the process which may come as a shock to many Pakistanis as well. According to the rules, if the outstationed YouTube Partner Program (YPP) member fails to furnish the tax details by the set deadline of May 31 this year, he will be taxed on his entire revenue generated from audiences acorss the world as Google will presume he’s stationed in the US.

That tax rate if the latter situation comes to being, would be 24 pc, which is the rate a local in US is liable to pay in withholding taxes.

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So now, if Pakistani YPP creator earns about 4000 clicks from the US-based audience, which will translate to US$ 16 due to CPM price of $4 for the US, and he has already furnished his credentials to Googld AdSense account by the deadline, and let’s assume he’s only liable to pay a five per cent in withholding tax to US due to the treaty Pakistan and US bilaterally enjoy, his tax amount will be US$ 0.8 (or Rs124.8 according to the present day exchange rate).

But if he hasn’t submitted his tax details of the country where he is based in, US authority will tax his entire revenue, generated anywhere in the world by 24pc assuming he’s operating his account in the US.

By this calculation, if he has earned a total of $250 from across the globe and mostly from Pakistan, which has nothing or only little to do with, he will be liable to pay $60 (or Rs9,360).

So now, if you are one, hurry up and get your tax details registered in your AdSense account and avail the discounted rate and avoid losing a part of your fortune to a country where you earn nothing or very little if at all.