Netflix and Disney Request Federal Court to Revise Streaming Tax for Local News Content
Netflix, Paramount, and Disney+ are seeking a review from a Canadian court regarding Ottawa’s new regulation mandating U.S. streaming companies to pay a 5 percent tax on revenues generated in the country.
ruled
on June 4 that American streaming services must pay the tax on all Canadian revenues, with 1.5 percent allocated to local news, starting in the 2024–2025 broadcast year. The estimated annual revenue from this tax is $200 million.
The Motion Picture Association-Canada, representing the companies, is challenging the tax and has filed both a leave to appeal and a judicial review application with the court.
statement.
“Our members’ streaming services do not produce local news nor are they granted the significant legal privileges and protections enjoyed by Canadian broadcasters in exchange for the responsibility to provide local news.”
The judicial review, shared with The Epoch Times by the MPA, asks the court to dismiss the requirement for streaming services to pay 1.5 percent for local news content.
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“The decision does not disclose any rationale for the CRTC’s determination that it is appropriate to compel foreign online entities to contribute to news production,” the court document stated.
“Just as Canadian services are not obligated to finance local news, foreign streaming services with no logical tie to local news production cannot be compelled to contribute to a local news fund.”
The MPA asserted that global studios and streaming services annually contribute $6.7 billion to produce entertainment in Canada, investing more in Canadian production companies than the CBC, Telefilm, or the Canada Media Fund combined.
The CRTC, in an email to The Epoch Times, mentioned that the Online Streaming Act mandated it to “modernize the Canadian broadcasting framework.” A spokesperson also indicated that the agency would refrain from commenting on the lawsuit during court proceedings.
“The CRTC will continue to strike a balance between broad consultation and swift action to establish the new regulatory structure,” the CRTC added.
Streaming Act Criticized
The CRTC’s decision has faced significant criticism since its announcement, with many arguing that Canadian consumers will ultimately bear the brunt of the tax on their monthly bills.
said consumers will either pay more or have fewer content choices due to the tax.
Prime Minister Justin Trudeau also acknowledged that Canadians are likely to shoulder the burden of the tax.
said in the House of Commons in March 2018 when questioned about higher taxes for streaming platforms. “We … assured not to increase taxes for taxpayers who are already paying enough for their digital subscriptions and Internet.”
questioned the streaming tax, stating that the federal government should focus on making life more affordable by reducing taxes rather than imposing new ones.
“That means cutting taxes, not imposing new ones,” said CTF federal director Franco Terrazzano. “Canadians have every reason to worry this new tax will mean higher prices to stream their favorite music, movies, and TV shows.”
Online News Act
The streaming tax follows the introduction of legislation by the federal government that mandates large tech companies to compensate Canadian media outlets for news content linked on platforms like Facebook. The legislation received royal assent on June 22, 2023.
blocking news content for Canadian users in August 2023 due to the act. Consequently, Canadian Facebook users can no longer access news links or content from Canadian news publishers and broadcasters.
negotiate an agreement with Ottawa.
The federal government agreed to a $100 million annual cap on the payments Google must make to media companies. A formula in the draft regulations could have required the search engine giant to pay up to $172 million to news organizations.
Andrew Chen and The Canadian Press contributed to this article.
