On the 10th, when Google’s withholding policy was announced, the Korean government began to find out the facts. The Ministry of Strategy and Finance announced a policy of first analyzing the purpose of US tax withholding on non-resident foreigners and what changes will occur in the future, and preparing countermeasures if necessary.
On the day, Google said that the US government will withhold tax on the revenue generated by US viewers out of the content revenue of YouTube creators around the world. From channel membership to Super Chat, ad inquiry, and super sticker, all income generated by YouTube is applied. This withholding tax was based on the provisions of Chapter 3 of the United States Federal Tax Law, “Withholding Tax on Non-resident Foreigners and Foreign Corporations”.
Domestic YouTubers are expected to receive a 10% tax rate. In general, a maximum tax rate of 15% can be applied according to the tax treaty that Korea has with the United States. However, YouTube content is limited to a 10% tax rate as an exception, as it falls in the literary sector including movies. Creators who have signed up for the YouTube Partner Program (YPP), which allows you to make money on YouTube, are required to submit tax-related information by May 31, regardless of whether or not they are making money from U.S. viewers. You can enter information through’Creator Studio’ on YouTube.
Google said it could deduct up to 24% of global gross income if tax information is not submitted by May 31st. A Google official said, “If you do not submit relevant information, more taxes may be imposed, so if you are a monetary YouTuber, you must enter the relevant information as soon as possible.”
YouTubers are keenly aware of Google’s announcement. However, there is an analysis that the proportion of US viewers who consume Korean content will not be relatively large because Korea is not part of the English culture. An industry insider explained that “Google’s action could hurt Australian creators in Asia-Pacific regions, but the immediate backlash will not be great as the proportion of US viewers who consume Korean content is small.”
When asked whether US YouTubers pay taxes to South Korea on the profits they make in Korea, Google replied, “Google adheres to local legal obligations as much as possible.” As Google answered that it would comply with the legal obligations of the country as much as possible, there is a possibility that Korea will also withhold tax for U.S. YouTubers who earned advertising revenue through Korean users in the future.
An official from the Ministry of Science and Technology explained, “We are grasping the purpose of taxation by the United States, and we do not yet know whether there is a necessity for that in Korea.”
[전경운 기자 / 홍성용 기자]
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