If you are a non-US person or you own a business that publishes and sells eBooks via Amazon’s Kindle Direct Publishing, print books through Createspace or audiobooks via Audible, a 30% withholding tax is deducted from your royalties and there’s a high likelihood you are eligible for REDUCED tax withholding on your royalties. In this guide I will show you how to reduce your tax withholding rate.
But, full disclosure – I am not qualified to give you tax, legal or financial advice. I have learned the ins and outs of this process from my own experience and this information is intended for entertainment purposes only…
Tax Withholding & Double Tax Agreements – How It Works
To put it simply, there is a tax treaty between USA and a number of other countries that has been made to free people from double taxation, i.e. taxing an entity, be it a person or a business, for the same tax twice in two countries.
For example, if a person is a resident of one country and receives income in another country, according to tax laws of each of these countries, said person may have to pay the same income tax two times. To avoid this type of nonsense, most countries have established double taxation agreements between themselves.
So, if you are a foreign person (from the perspective of the US) and USA does have a tax treaty with the country you’re from, then you are eligible for tax withholding (hurray!).