The tax you are having issues with, withholding tax, is one only applied to income that is classified as “US source income” for transactions that go through our Payouts system. On itch.io, we look at the buyer’s information to determine the source in order to find out if we should apply the withholding tax on the revenue generated by a particular transaction.
Generally speaking:
- If the product is purchased and used/consumed within the United States, the royalties earned from that sale would be considered US Source Income, subject to potential withholding tax.
- If the product is purchased from outside the United States and used/consumed outside the US, the royalties would generally not be considered US Source Income and would not be subject to US withholding tax.
Hypothetically speaking, your request to block US buyers will prevent the collection of withholding tax, but it will also prevent you from collecting the remaining revenue from those transactions. You would just be losing out on revenue.
That said, we currently don’t expose tools to block regional purchases except for extreme cases where there is a legal reason to block the transaction.
Hope that explains.