“Nothing is certain in life except death and taxes.” This world-famous quote coined by Benjamin Franklin is now on the hunt for YouTube dollars.
On top of the local income tax that you have to pay as a Singaporean content creator, you will now have to pay additional U.S. taxes if you have generated revenue through your U.S. viewers. Google (which owns YouTube) mentions that this may begin as early as June 2021. This will be paid to the U.S. government.
If you don’t submit your tax info by 31 May 2021, up to 30% of your earnings may be held.
YouTube’s New Tax Imposed On YouTubers Outside Of U.S.
YouTubers outside of the U.S. will now be taxed based on their earnings from U.S. viewers from June 2021, according to new regulations stipulated by the YouTube Partner Programme.
The amount taxed will depend on 2 things:
- How much royalty income you generate as a YouTuber from viewers in the U.S.
- Whether or not your country has a tax treaty with the U.S.
All monetising video and content creators on YouTube, regardless of their location in the world, should provide provide tax information to Google’s AdSense account, regardless of whether you earn revenue from viewers in the U.S.
In its support page, Google says creators will need to submit relevant tax info in AdSense by 31 May 2021 so Google is able to determine the correct amount of taxes to deduct, if any apply. Failure to do so will result in Google having to deduct up to 30% of the creator’s total worldwide YouTube earnings.
- For those with a Business Account: the default withholding rate will be 30% of U.S. earnings if the payee is outside of the U.S.
- For those with an Individual Account: backup withholding will apply and 24% of total earnings worldwide with be withheld.
- For those who do not submit tax information to Google: If no U.S. tax info is provided, Google may withhold up to 24% of total earnings worldwide, and not just their U.S. earnings.
The exact tax holding rate will be made available to creators via their AdSense account once their tax information has been submitted. According to the tech giant, the withholding rate also depends on whether the creator’s country has a tax treaty with the U.S. Treaty benefits can be claimed as long as the creator provides a taxpayer identification number.
If you make a monthly income of $1,000 as a YouTuber, and out of that $1,000, $100 comes from your viewers in the U.S., you will be taxed as follows:
i. If you have submitted tax information:
Up to 30% of $1,000 = $30 or less, depending on how much revenue you generate
Net revenue = $970 or more
ii. If you have not submitted tax information:
up to 24% of $1,000 = $240
This is why you should submit your tax information to Google. If you have, only earnings from U.S. viewers may be withheld. If you have not, global earnings may be withheld.
Furthermore, as Singapore does not have a tax treaty with the U.S., there will be no additional tax incentives offered to Singaporean YouTubers.
There’s More: You Are Also Required To Pay Taxes In Singapore As A Content Creator
As a content creator (whether it is through blogging, YouTube or Instagram), you will also need to pay taxes to IRAS if your activities are performed repeatedly or habitually in exchange for monetary and non-monetary benefits such that your annual net business income earned is more than $6,000. You can refer to the Income Tax Rates to see how much you will need to pay in income tax.
If you are a solo YouTuber or content creator operating as an individual, then your income from social media should be declared as self-employed income (whether it is your side hustle or full-time job). You can read our guide to tax obligations as a self-employed for more information.
If you are operating as a business, then you will have to pay corporate tax on your earnings from social media. You may refer to this guide for corporate taxes in Singapore.
Many content creators today also receive products and/or service for review purposes or as reward for collaborating with brands. You will also have to declare non-monetary benefits to IRAS if:
1. You are given a product / service for continuous consumption or testing
2. The value of each product / service exceeds $100
This applies to individual items, bundled or packaged products and a recurring supply of products and services over time received by a blogger in the way of promotions or gifts of appreciation. However, you do not need to declare the items in question for tax treatment if the item’s value is below $100.
– Lipstick with a market value of $49 — No need to declare
– Camcorder for vlogging with a market value of $330 — Need to declare
Bundle / Packaged Items
– A 5-course meal provided by a restaurant for tasting and the bill adds up to $369 — Need to declare
– A total of 10 face masks given upfront, each with market value of $10 — Do not need to declare as its value does not exceed $100 and it is not a recurring supply
Recurring Supply of Products/Services Provided Over Time
4 sessions of body massage worth $200 — Need to declare as it is provided over a period of time
How To Declare Sponsorships
The value of the sponsorships together with income derived from your blogging activities should be declared as ‘Revenue’ under trade. As a self-employed person, you are advised to maintain proper records for all income (including sponsorship income) and expenses so as to facilitate the annual income tax filing.
Even though there may not be any contracts signed prior to reviewing / promoting any products or services, taxes may still apply according to payments received.
Key Expenses That Are Deductible
Expenses that are wholly and exclusively incurred in the production of income are claimable as deductible expenses, e.g. cost of maintaining a website, Internet subscription fees and payment to freelance writers for writing blog posts.
When it comes to taxes, content creators and YouTubers are not spared, and it will be increasingly important for you to keep abreast of the latest tax changes across multiple social media platforms that will be regulated by the IRS in the U.S.
Since YouTube has started this already, it will not be long before other social media platforms are also required to withhold taxes for earnings from U.S. viewers. It also will not be surprising if more countries start applying such a form of withholding tax on social media platforms.
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