Kenyan content creators are feeling the pinch after YouTube began withholding a 24 per cent tax on US-based ad views from this month. This means their earnings will equally be affected.
The taxes apply in US-based AdSense, YouTube Premium, Super Chat, Super Stickers and Channel Memberships.
‘New tax is unfair’
Local YouTubers are affected as Kenya does not have any tax treaties with American government. Countries with tax pacts with Washington such as India are spared the charges.
Content creators who fail to submit tax information via their AdSense account will be slapped with a 24 per cent worldwide deduction on advertisement viewerships.
“If your tax isn’t provided by May 31, 2021, Google may be required to deduct up to 24 percent of your total earnings worldwide,” Google said earlier.
Mr Daniel Owiyo, who runs a YouTube channel called Dennis THE NATIONAL says the new tax is unfair since it will make life difficult for him as he wholly depends on his channel for earnings.
“I always receive between Sh30,000 and Sh60,000 depending on the month. I depend entirely on YouTube,” Mr Owiyo says on his channel.
The new changes on Chapter 3 of the US Internal Revenue Code, which govern withholding of taxes on non-residents and foreign companies, compel YouTube to withhold taxes from creators under its YouTube Partner Programme who earn on the platform from US citizens.
“Google may begin withholding US taxes on earnings you generate in the US as early as June 2021. Please submit your US tax info in AdSense as soon as possible,” Google said.
This follows local digital services tax that came into effect in January. It levies a 1.5 per cent charge on sale of e-books, movies, music, games and other digital content by foreign firms using the internet in the country.
The acts prescribe that digital tax shall be payable by a person whose income is earned in Kenya from the provision of services through digital channels.
The Kenya Revenue Authority is targeting over 1,000 businesses and persons under the new digital taxes.