Starting later this year somewhere in June or later, YouTubers in Malaysia who are under the YouTube Partner Program will be required to pay taxes to the United States.
The Partner Program let content creators to generate income from ads as long as they have more than 1,000 subscribers.
Under US tax law, Google (YouTube’s parent company) is required to withhold taxes when non-US creators earn income from viewers in the US.
Creators are require to submit relevant tax information to determine whether any US withholding taxes apply and where applicable, withhold US taxes from creators’ earnings beginning later this year.
Be mindful that it may be required to deduct up to 24% of their total earnings worldwide, not just income earned from US viewers if content creators don’t submit their tax info latest by May 31.
Those who submit the required info and are eligible for “tax treaty benefit” will only have to pay up to 15% of earnings from viewers in the US.
However, Malaysia does not have a tax treaty with the US according to information on the US Inland Revenue Service (IRS) website.
In which case, they are likely to be subjected to 30% deductions from US viewers, as that’s the rate for countries without a tax treaty.
The tax deductions will apply to earnings from viewers in the US from ad views, YouTube Premium, Super Chat, Super Stickers and Channel Memberships.
For details to submit the info, content creators will have to sign in to their AdSense account, select Payment and then Manage Settings. Then they will have to scroll to their payment profile and click edit next to “United States Tax”.
Content creators can estimate the amount that will be deducted by using YouTube Analytics and applying a geography filter (in this case, the US).
The tax withholding rate will also be visible on the creator’s AdSense account after they submit the US tax info.
Also, according to the Inland Revenue Board (LHDN) guidelines on Digital Businesses, YouTube is a taxable business model under the broadcasting and media category.