New YouTube Tax Will Dent Revenue From US Market: Indian Creators

Bhuvan Bam’s team said 10% of his YouTube revenue comes from the US and the tax will hit the revenue by around 2%.

Bhuvan Bam’s team said 10 percent of his YouTube revenue comes from the US and the tax will hit the revenue by 2 percent.

(Image: Aroop Mishra/The Quint)

YouTube has communicated to content creators on its platform that YouTubers from outside the United States could soon see up to 30 percent of their earnings on the platform generated from US viewers being withheld as tax.

Indian YouTube creators have been asked to submit their tax information to the platform so that it could be determined if there is any tax incidence on their earnings from US viewers and how much if so.

This new tax, applicable June onwards, will impact the earnings of Indian YouTubers, especially those who have a large viewership in the US. Moreover, YouTubers say the revenue earned from an ad in the US is higher than that from the same ad shown in India.

The Quint spoke with the management teams of creators like Bhuvan Bam who has over 20 million subscribers on his channel who said over 10 percent of the total revenues come from the US and they will now be taxed on their earnings from ads generated in the US.

Beebom, an English language tech review channel with over 2 million subscriptions, told The Quint that while viewers in India are more than those in the US, the average revenue earned from ads shown to US viewers is higher.

While so far only tax on earnings from YouTube has been announced, content creators have expressed concern over whether Google, which owns YouTube, would also start levying taxes on their Google AdSense program, which would mean taxation on advertising revenues earned by websites through ads placed by Google.

What is This Tax?

Google says that it has a responsibility to ‘collect tax information from all monetising creators outside of the US’ and will now deduct taxes when these creators earn income from viewers in the US.

These additional taxes will be applicable to all your US-based YouTube earnings, including “YouTube Premium, Super Chat, Super Stickers and channel memberships,” read a statement on the Google support page.

Google will start asking for tax information starting 10 March 2021. Users can simply add details of their tax information by clicking on the AdSense account linked to their YouTube Channel.

Individuals will have to fill Form W-8Ben-and businesses will be required to fill Form W-8Ben-E.

Rohit Raj, Partner and manager of actor and content creator Bhuvan Bam said they have received an official communication from YouTube explaining the process and requirements. What happens if one doesn’t submit the form?

“If one doesn’t submit the forms then the entire channel will come under the taxation rule. So, whatever revenue you are making on your entire channel across the world and not just from US viewers, will be taxed,” Rohit Raj told The Quint.

“But if you do submit your tax information, then only the US traffic will be impacted and the rest of the revenue from other regions will not be impacted,” said Devinder Maheshwari, co-founder and CEO of the Beebom channel on YouTube.

In the event that the forms are not submitted by 31 May, Google will legally presume the YouTuber to be US-based and the company will have to withhold 24 percent of total earnings (not just US earnings).

How Much Would it Impact YouTubers?

Content creators say over the years, viewership of Indian comedians, entertainers, musicians, and academic channels has increased steadily in the US among the NRI population as well as among the non-NRI population for tech, math and science-based channels.

“In Bhuvan’s case, 10 percent of his revenues come from viewership in the US. So he will have to pay tax on this 10 percent of his revenue,” Raj told The Quint. “In our case our revenues will be impacted by 2 to 2.5 percent overall. It doesn’t affect us significantly and we’ll stick to all the rules that we are required to comply with,” he added.

Raj added that while in the longer run it doesn't really hurt Bam’s channel as most of the content is in Hindi, “But for those creating content in English and with heavy viewership in the US, they'll be impacted by the tax on whatever they make from there.”

Beebom, which currently has 2.16 million subscribers, is an English language channel with a large US audience.

“We make English language tech content on YouTube. So, a lot of our revenue is from the United States, UK, and other English speaking countries,” Maheshwari told The Quint.

US Ads Fetch Higher Revenue Than Those in India

Beebom gets a significant portion of its viewership and ad revenues from the US and will be impacted by the tax, the channel’s co-founder said.

“Yes, we'll be affected,” said Maheshwari explaining how despite viewership of the channel being higher in India, the revenues are higher from the channel’s US traffic.

“The majority of our viewership is from India but the majority of our revenue is from the US. This despite our audience size being less in the US. This is because CPM, RPM are very high in the US,” Maheshwari told The Quint.

RPM is a metric used to determine the total ad revenue a publisher is set to earn for 1,000 ad impressions. CPM, on the other hand, is the amount an advertiser will pay for 1,000 ad impressions.

Simply put, the amount bid for an ad in the US is higher. “If a user who sees or clicks the ad from a country like the US, the revenue would be higher compared to the same ad being watched in India or another Asian country,” Maheshwari explained.

The pricing of an ad is dynamic and varies not only from region to region but also depending on the time of day and the demand for the video.

The Indian Express had reported that according to YouTube, the tax withholding rate on royalties for valid claims made under India’s tax treaty with the US is 15 percent. The same for the UK and Canada is set at 0 percent, and for South Korea and Mexico at 10 percent.

Concerns About Tax on Google’s Ad Revues

Since YouTube has already announced the imposition of this tax, creators like Maheshwari, who also run a website are wondering if Google will do the same with its Google AdSense program.

AdSense is a program where websites earn money by allowing Google to place ads on their sites.

“We're also in talks with our CA to figure out how we would have to handle this taxation if Google AdSense also places the same tax on us,” Maheshwari said, adding that “I am also curious whether they are going to bring this to the Google AdSense program for websites as well.”

According to him, “If Google does the same with Google AdSense, then it will be really really big.”

He said he wasn’t surprised by YouTube’s announcement because Amazon was already levying this tax.

“We also maintain a website beebom.com where we follow the same practice with Amazon Associates,” Maheshwari said.

“We did know that if Amazon is levying this tax then others will do the same sooner or later. Some may be surprised by this move but we were anticipating it,” he added.